Democrats speaking on a U.S. House of Representatives panel Wednesday told a federal bank regulator that recent decisions to allow banks to enter commercial real estate projects could potentially open a backdoor for banks to mix banking and commerce, and threaten federal deposit insurance funds, according to reports.

In a letter to the Office of the Comptroller of the Currency, Representatives Barney Frank, D-Mass., and Paul Kanjorski, D-Pa., asked the banking regulator to respond to specific questions about recent decisions.

The congressmen said they were concerned that the move was “a significant departure from statutory requirements and previous OCC interpretations; newly permit national banks to engage in a host of risky activities; potentially grant national banks a backdoor to mix banking and commerce; and threaten the deposit insurance funds,” according to a Reuters report.

The December OCC rulings allowed three of the largest national banks in the nation to invest in the development of office buildings, hotels, residential condominiums and a windmill farm.

The National Association of Realtors has been fighting to keep banks out of the real estate brokerage business for several years. The trade group met with OCC representatives in February to express concern over the December rulings and ask the regulator to reconsider.

After the meeting, John C. Dugan, Comptroller of the Currency, said, “First, none of our interpretative letters has anything to do with real estate brokerage – nothing at all – even though this is the issue of most direct interest to NAR’s members.”

Secondly, Dugan said, “there is only limited legal authority for national banks to engage in real estate and investment activities. These approvals fell within that limited authority.”

Finally, Dugan said, “[W]e fully recognize the limits of this authority and have heard and understood the concerns raised by members of Congress about the separation of banking and commerce. I have no intention of expanding our limited authority to breach this separation. The limits in the three interpretations preclude this result and the OCC will apply these limits consistently to all national banks.”

Financial services groups, including the American Bankers Association, America’s Community Bankers and others, jointly issued a letter this week to Congress to say that Realtors have gone too far, reports said.

The financial groups claim that NAR’s campaign could undermine confidence in the banking system and keep banks from engaging in activities like community development, according to Reuters.

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