Thursday, February 8, 2007

I'll kill your competition, if you kill mine

Washington Bureau - bizjournals.com

Banks praised legislation that would keep retail chains like Wal-Mart out of banking, while Realtors applauded a bill that would keep banks out of real estate.

Rep. Barney Frank, D-Mass., introduced legislation that would prevent major retailers from owning federally insured banks through an industrial loan corporation. Frank is chairman of the House Financial Services Committee.

"Commercial firms should not own banks," says Edward Yingling, president and CEO of the American Bankers Association.

The legislation is timely because of recent applications for ILCs from large commercial firms. An FDIC moratorium on new ILCs was scheduled to expire Jan. 31.

"We urge Congress to act now before the wall between banking and commerce is damaged beyond repair," Yingling says.

Allowing big retailers to own banks concentrates economic power, hurts local merchants and threatens the soundness of the nation's financial system, contends the Independent Community Bankers of America.

Realtors make similar arguments in their long-standing effort to keep banks out of the real estate business. They've got a powerful ally as well: Sen. Hillary Rodham Clinton, D-N.Y., is sponsor of legislation that would define real estate brokerage and management as commercial activities, not financial activities, and therefore make them off limits to banks.

"Without passage of this legislation we are concerned that national bank conglomerates will continue their attempts to enter into the real estate industry, putting both competition and the nation's economic health at risk," says Pat Vredevoogd Combs, president of the National Association of Realtors.

Realtors failed to win passage of this legislation in the past, but Congress has used spending bills to block attempts by the Federal Reserve and the Treasury Department to define real estate as a financial activity.

For more information, see http://www.aba.com/ or www.realtor.org

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