"Why Would Consumers Want Big Banking Conglomerates to Take Over Local Real Estate?" read the full-page Washington Post advertisement on Wednesday. The ad listed several newspaper clippings highlighting stories of banks' past bilking of their mutual fund clients and their more recent epidemic of fumbling customers' confidential account information. This ad was just the most recent in a series of full-page print ads from the National Association of Realtors (NAR) to further its ongoing turf war with the American Bankers Association (ABA).
Speaking to the House Financial Services Committee, ABA Chairman and Executive Vice President of Wachovia Betsy Duke made the obvious point in favor of allowing banks to compete with real estate agents in the lucrative business of selling houses: letting them compete will increase competition. Hard to argue with that one.
NAR President Al Mansell (the CEO of Coldwell Banker Residential Brokerage, a subsidiary of Cendant) took a swipe, accusing bankers of irresponsible lending practices and failure to protect customer account information. He also implied that bankers might subjugate the best interests of consumers to the pursuit of profits.
The question is how the banks differ in that regard from the real estate cartel's aim. Real estate agents continue to charge 6% commissions for the sale of homes in a market where homes don't just sell themselves, but often do so for more than the asking price. Meanwhile, the NAR is fighting an insurgency by online and discount real estate brokers who charge less than the 6%. "Full-price" agents deny discount agents access to databases of houses for sale, refuse to show properties being handled by discounters, and more.
Are banks really going to be worse for consumers than Realtors already are?
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