The National Association of Realtors this week announced support for a Federal Deposit Insurance Corp. decision to delay a proposal for new banking laws relating to the operation of state banks’ branches in other states.
“The FDIC decided not to proceed at this time with Federal Register publication of an advanced notice of proposed rulemaking after many organizations, including (the association), testified against the preemption petition at the FDIC’s public hearing held last May,” the association announced this week.
The Financial Services Roundtable had asked the FDIC to “preempt state laws and allow state banks to operate nationally under the laws of their home states,” the association announced, and “The FDIC is expected to draft a narrower proposed rule that would restate existing law related to the operation of out-of-state branches of state banks later this year and is also expected to revisit the preemption request at a future meeting.”
Federal agencies publish an advance notice of proposed rulemaking in order to seek public comment and help the agency decide whether to publish a proposed rule and if so, what to propose, the association noted.
“In its May testimony, NAR urged the FDIC to deny the petition to preempt state laws because it would harm the ability of states to protect their citizens; result in undue concentration of banking services and fewer choices for consumers; open the door to the mixing of banking and commerce; undermine the state banking system; and disrupt the competitive balance among financial service providers,” according to the announcement.
Al Mansell, NAR president, said in a statement, “Real estate is a local business, which makes preemption of state and local laws of great concern to Realtors. NAR and its members recognize the important role financial institutions play in helping American families own their own home. We object to the preemption of state and local laws that result in fewer consumer protections.”
The announcement also stated that NAR believes the new rule would result in “states competing to entice banks – and the jobs that come with them – to relocate by enacting laws that minimize regulatory burden at the expense of consumer protections. NAR fears that under the petition banks headquartered in states with the loosest consumer protections would thus be permitted to export the lax home-state standards to their activities in the other 49 states.”
The association has been following banking laws very closely for several years, and one of the association’s top legislative priorities has been to block the entry of federally chartered banks into the business of real estate brokerage.
The association has argued that the entry of federally chartered banks into real estate brokerage may give major financial services companies an unfair advantage in real estate because of the vast resources at their disposal, and could lead to cross-selling of mortgage and real estate brokerage products that would not necessarily save consumers money.
Supporters of the entry of federally chartered banks into real estate brokerage, meanwhile, have said it would be healthy to introduce new competition into the real estate marketplace, and note that many real estate brokerages already offer mortgage services to their clients.
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