"Why Would Consumers Want Big Banking Conglomerates to Take Over Local Real Estate?" read the advertisement's headline. The ad listed several newspaper clippings highlighting stories of banks' past bilking of their mutual fund clients and their more recent epidemic of fumbling customers' confidential account information. It appeared in yesterday's Washington Post, as one of a series of occasional full-page print ads from the National Association of Realtors (NAR) to further its ongoing turf war with America's banks.
As the Post (NYSE:WPO) reported in today's edition, the PR war between the NAR and the bankers' own mouthpiece, the American Bankers Association (ABA), has recently transformed into a real house-by-house battle that has moved onto Capitol Hill, where the two warring parties have pleaded their respective cases before the House Financial Services Committee.
Arguing for the ABA, Wachovia (NYSE:WB) Executive Vice President and ABA Chairman Betsy Duke made the obvious point in favor of allowing banks to compete with real estate agents in the lucrative business of selling houses -- letting them compete will increase, er, competition. Hard to argue with that one.
But NAR President Al Mansell took a swipe. Mansell, also the CEO of Coldwell Banker Residential Brokerage, a subsidiary of Motley Fool Inside Value pick Cendant (NYSE:CD), proceeded to accuse the bankers of irresponsible lending practices and failure to protect customer account information. He also implied that bankers might subjugate the best interests of consumers in the pursuit of generating profits. (There's a shocker.)
But this Fool wonders how the banks differ in that regard from the real estate cartel's aim. Real estate agents, after all, continue to extract 6% commissions for the sale of homes in a market where homes don't just sell themselves, but often do so for more than the asking price. At the same time, the NAR attempts to squelch an insurgency by online and discount real estate brokers who charge less than the NAR's 6%. "Full-price" agents deny their discount brethren access to databases of houses for sale, refuse to show properties being handled by discounters, and so on.
Granted, if the NAR members are the ones who built these databases and sunk the time and capital into them, then they're arguably entitled to deny access to their competitors. But to do that and then turn around and claim that the real estate agents are actually pro-competition, and then oppose a bill that would clearly promote competition by adding a new, well-capitalized class of competitors into this market, is the height of hypocrisy.
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Fool contributor Rich Smith owns no shares in any company mentioned in this article.
