NAR: Banks Must Not Be Permitted to Engage in Commercial Activities.

WASHINGTON -- The National Association of Realtors([R])expressed growing concern to a House panel today about the inappropriate expansion of banking powers being permitted by the Office of the Comptroller of the Currency, an agency within the Department of the Treasury.

NAR contends that the OCC's rulings inappropriately expand congressionally established bank authority, in essence creating a new law, without public or congressional participation. "The OCC's actions set in motion a process that could result in dramatically increased risk to national banks and threaten the safety and soundness of the nation's banking system," said NAR President, Thomas M. Stevens, in his testimony before the House Government Reform Subcommittee on Government Management, Finance and Accountability.

In December of 2005, the OCC granted three national banks the ability to enter into speculative real estate development transactions. The rulings in question include permitting PNC Bank to develop retail space, offices, a hotel and condos for resale; approving Bank of America's request to develop a Ritz-Carlton Hotel, in which less than half of the rooms will be used for its own business; and authorizing Union Bank of California to own 70 percent of the equity interest in windmill farms. NAR believes that those OCC actions represent a marked departure from what is permitted by the National Bank Act, which clearly prohibits the mixing of banking and commerce.

"We remain concerned about the OCC's real estate decisions and strongly believe that these rulings will inevitably lead to an irreparable breach in the wall separating banking and commerce," said Stevens. "Without congressional action, we foresee the OCC stringing together authority with decisions that permit national banks to participate in negotiating sale transactions on behalf of real estate investors and authorize national banks to engage in full service real estate brokerage free from controls and protections established by state and local laws," said Stevens.

NAR contends that the results of these decisions do not serve consumers or businesses well and breach the separation of banking and commerce. NAR asked Congress to urge the Comptroller to reconsider the December 2005 rulings and to direct the OCC to take no further future actions that may result in the expansion of banks powers to engage in real estate development.

Also testifying on behalf of the commercial real estate industry was Cynthia Shelton, CCIM, a Realtor([R])and vice president of a brokerage firm in Orlando, Florida. "As a commercial real estate professional who has developed close working relationships with large banks, I am concerned that the decisions by the OCC will compromise banks' ability to act as honest brokers of financial services," according to Shelton.

The National Association of Realtors([R]), "The Voice for Real Estate," is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

REALTOR([R]) is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS([R])and subscribe to its strict Code of Ethics.

Information about NAR is available at www.REALTOR.org. This and other news releases are posted in the Web site's "News Media" section in the NAR Media Center.