The irony of this is just too good.

In the public eye, Republicans are the party of big business, Wall Street, and corporate CEOs -- in effect, natural allies of the banking industry. Democrats, so the thinking goes, represent unions, minority groups, and environmentalists.

So logically you might think that efforts by the banking industry to add real estate services to their stable of products would sail through the Republican-dominated House of Representatives and fail in the Democratic-controlled Senate. Instead, bankers are being rebuffed by House Republicans and must rely on Senate Democrats to head off NAR's efforts to bar them from real estate.

For better than 18 months bankers and brokers have been having a turf war, the question being who should get brokerage commissions when turf is bought, sold or managed. The bankers want in and their allies at the Federal Reserve and Treasury Department would be only too happy to comply, were it not for NAR and its lobbying efforts.

The issue is this: Are real estate brokerage and management examples of "financial services"? Are they "in nature or incidental to financial activities"? If yes, then federal regulations might well allow bankers to open brokerage offices in competition with traditional real estate firms.

Banks in this matter are not powerless. There are banks in every community, banks have money, and banks make loans and give credit -- including loans and credit to those in Congress. The banking industry is a forceful Washington presence, and opposition to such a political steamroller is neither easy nor certain.

Also, not everyone in real estate is opposed to letting bankers through the regulatory door. Some think banks would be easy competition. If you have a good-sized brokerage firm that might be acquired by a bank, then banks in real estate may seem attractive.

Now we have the House Appropriations Committee voting to prohibit banker/brokers until late 2003. In addition, the House Financial Services Committee might also support legislation locking out the banks.

This is a nightmare if you're a banker. You must now rely on the U.S. Senate to stop the House pro-NAR measures. You remember the Senate, that's the place run by Democrats, folks who traditionally view bankers the same way bears look at salmon.

It's not clear that NAR will win a total victory in Washington -- the House measures may not pass, anti-banking rules could be eliminated in a conference committee, and the Senate could wind up supporting the banks, a possibility given that Democrats are more comfortable with banks and their PAC money than common wisdom might suggest.

But still, something important has happened here. The banks lost the easy route, a quick and quiet regulatory ruling in their favor from the Federal Reserve and the Treasury Department. They have lost in the House. They're 0 and 2. Their best hope is not a victory in the Senate, but rather a tie of sorts which simply prevents pro-broker House measures from being passed.

The banking industry has got to look at events in Washington and wonder: Is this worth our political capital? At a time when financial institutions, Wall Street, and stock brokerages face massive calls for new regulation, maybe bankers-as-brokers is an idea which should be shunted aside for the next few years.

Bankers fought for and won the right to sell stocks and mutual funds, not businesses held in high repute by much of the public at this moment and probably not for a long time to come. To suggest that banks should now be rewarded with additional powers defies both logic and the current political winds.

NAR's opposition to the banking industry is a case study of Washington politics at work. NAR is rolling up victories on every front with a combination of Capitol Hill lobbying, letter writing, and quiet reminders to senators and representatives that there sure are a lot of real estate licensees in every state and congressional district who would appreciate support on this issue.

As to the bankers, they must be stunned at what has happened. Who would have thought that the folks with the biggest vaults in town would not get their way in Washington? Now that's news.

For more articles by Peter G. Miller, please press here.

Published: July 16, 2002

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .