BANKERS SEEKING WIDER SCOPE.

Byline: GREGORY J. WILCOX Real Estate

Matt Horn has been selling homes in the San Fernando and Santa Clarita valleys for 12 years. Horn likes his job, but it could change dramatically if the American Bankers Association has its way.

The lobbying group for the nation's banks is trying to convince the Federal Reserve Board that federally chartered financial services holding companies should also be Realtors and property managers.

This has already resulted in much political posturing, survey taking, ``White Paper'' writing and jawing before congressional committees.

The packet that arrived last week outlining the National Association of Realtors position on the issue was as big as a small-town phone book.

Horn offers a more succinct reason why this is a bad idea.

``Banks work hours that are 9 to 5. We're basically a 24/7-type of service,'' he said of real estate agents.

What is happening in Washington now is just an extension of nearly 20 years of congressional wrangling over banking industry reforms.

It resulted in the Gramm-Leach-Bliley Act of 1999, important legislation because it demolished the walls separating the banking, securities and insurance industries.

Now banks, securities firms and other kinds of financial services providers can operate under the same corporate logo and offer consumers a broader range of services.

Bankers think that giving real estate agents desks next to their loan officers is a logical extension the Gramm-Leach-Bliley Act.

``The bottom line is you have real estate companies that are offering mortgage services. The whole concept of modifying the bill was to level the playing field,'' said Charlotte Birch, spokeswoman for the bankers group.

In May, Philip Burns, chairman and chief executive officer of Farmers and Merchants National Bank of West Pointe, Neb., told a House committee dealing with financial services that allowing banks to sell real estate will not result in more risk to his industry.

And everybody will be better off.

``Competition improves efficiency, pricing and servicing levels - all to the benefit of homebuyers,'' he said.

Burns also pointed out that not all banks will add a real estate line but those that do will get into the business because of the belief they can offer better service.

Besides, credit unions are already in the real estate business, he noted.

And buying a house is a financial transaction, not run-of-the mill commerce.

Richard A. Mendenhall, president of the National Association of Realtors, testified at the same hearing and naturally had a much different take on the matter.

His group is not quite preaching that the barbarians are at the gate, but they are close.

Banks have special access to credit at the Federal Reserve discount window and at Federal Home Loan banks, enabling them to borrow at below market rates.

Real estate companies that also offer mortgages don't enjoy this perk.

``Due to their federally chartered advantages, bank ownership of real estate brokerage companies would stifle competition, limit consumer choices and predictably raise consumer costs,'' Mendenhall testified.

Realtors have found a surprising supporter in William Seidman, the former chairman of the Federal Deposit Insurance Corp. who was often quoted in the business press during the early 1990s. During the past 10 years he's spent a lot of time in Asia trying to help some of countries there sort out their banking problems.

Some of those are caused by mixing commerce and banking, which is what some observers say will happen if banks here are allowed to sell real estate.

Writing in the April 20 edition of American Banker Seidman noted that he used to believe that separating commerce and finance was an arbitrary regulatory intrusion.

After his experience in Asia he thinks otherwise.

That barrier ought to stay in place.

``Selling a building is fundamentally a commercial transaction. Indeed, if the Fed and the Treasury decide to classify real estate brokerage as a financial activity, the distinction is between commercial brokerage and financial brokerage will be lost,'' he wrote.

In these kinds of debates it's impossible to figure out which group is right and which one is wrong.

This, though, is true.

Realtors are fighting to protect their turf and and bankers are trying to expand theirs, both noble endeavors in business.