You've probably heard of "The Big Dig" in Boston, "The Big Tent" at the circus and "The Big Sur" in California, but "The Big Grab" by banks into real estate brokerage is one "Big" you should become concerned about fast. 

At the urging of some of the nation's largest and most aggressive banks, the Federal Reserve Board and the U.S. Treasury are proposing to allow financial service holding companies and national bank financial subsidiaries to offer real estate brokerage, management and relocation services. The banks' plan is to get the government to define real estate as a financial activity, rather than a commercial one, making it part of their ever-growing myriad of services. If this proposal becomes reality, not only could it take you, the REALTOR®, out of the center of the real estate transaction, it could put you out of business all together.  

To understand what might happen to us, take a look at what's happening to two businesses that banks are entering aggressively: mutual funds and insurance. A record number of banks are moving quickly to acquire insurance agencies, the traditional method of insurance distribution. Experts predict 40 of the nation's top 100 insurance agencies will be bank owned by the end of next year. Bank-owned funds now account for about 20 percent of the mutual funds market, where they've also built market share by buying out rather than out-competing their independent rivals. 

They have something worse in mind for us. They would cross-subsidize their brokerage operations with profits from banking operations that rely upon taxpayer-provide deposit insurance. And bank-owned brokerages will have access to banks' extensive databases of depositors, borrowers and credit card holders. Conflict of interest? You bet. 

This "Big Grab" through sheer marketplace power could change our business forever, and definitely not for the benefit of the consumers.  

In fact, consumers would be the real losers in this deal. We all know that real estate brokers' loyalty is to buyers and sellers. As real estate professionals, our success depends upon the quality of service we provide our customers. On the other hand, banks' expertise and vested interest lies in making loans, not providing real estate services. Even the banks admit that their primary goal in requesting this foray into real estate brokerage is to diversify their product line, not to serve consumers better. 

The NATIONAL ASSOCIATION OF REALTORS® is launching a fierce battle against the Fed's proposal. Soon we will ask you to get involved now to help Stop the Big Grab. We must not let banks take us out of the center of the real estate transaction. We must not let banks gobble up some brokerages and drive the others out of business through price-cutting and subsidizing their real estate operations. This proposal is bad for REALTORS® and it's bad for consumers. 

It's extremely important that we work together and with all the passion and energy we can muster to fight the Fed's proposal. Find out more about the "Big Grab," by accessing the new Big Grab web page on OneRealtorPlace. In early February, we will provide instructions on how you can write a comment letter to the Fed and Treasury. 

Published: January 19, 2001

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Richard A. Mendenhall is the 2001 president of the National Association of Realtors. A veteran with more than 25 years of experience in the field and the fifth generation of his family in real estate, Mendenhall is the owner of RE/MAX Boone Realty, in Columbia, MO. This commentary reflects the views of Mr. Mendenhall only, and not necessarily the views of any organization, association, or website.