In December 2001, Realtors introduced the legislation in an effort to stop banks from entering the brokerage or management side of real estate. However, the roots of the current battle lie with an act that passed three years ago.

"Basically, the banks petitioned the Federal Reserve Board and the Treasury Department in March 2000 to be allowed to get into realestate management and brokerage," says Linda Johnson, spokeswoman for the National Association of Realtors (NAR) in Washington. The banks petitioned under financial-services reform legislation passed in 1999, known as the GrammLeach-Bliley Act. "Realtors were writing letters to Congress, with their legislative efforts culminating last month," she adds.

The NAR's perspective is that the proposed regulation would lead to less competition. Its case also focuses on consumers, bankers, and the conflict of interest Johnson says would ensue. "If banks enter the realestate market, there'd be a conflict of interest, fewer choices for consumers, and higher loan prices," she says. "It'd be the same kind of situation if a business wants to lease or develop property."

Both the American Bankers Association (ABA) and the New York Bankers Association (NYBA) say if there is a conflict of interest realestate agents are already guilty if they offer financial products.

Catherine Pulley, spokeswoman for the ABA in Washington, likens the situation to the song, "If Loving You is Wrong, I Don't Want to be 55 Right."

"If combining brokerage and management is so wrong, then the NAR doesn't want to be right," she says. "What the NAR is trying to do is scare customers," Pulley continues. "They don't want the competition. They don't have any right now."

Michael Smith, president of the NYBA, says that the Gramm-LeachBliley Act broadly stated how to define financial services. "It was clear in the act that it applied to security, insurance, and banking," he says. "It gave additional rulemaking authority to the Federal Reserve and the Treasury. So we applied to the Federal Reserve that real estate be defined as a financial service, and that raised opposition."

Central to this argument is regulation versus legislation. "The banks are trying to get through regulation that which they could not get through legislation," Johnson says. "The banks have tried to use the regulatory process to get around Congressional intent. We are saying that a market change of this magnitude should go through legislation."

Smith contends that there is no need for new legislation. "The activities would be subject to federal and state laws as it relates to conflicts of interest" he says.

George Mahshie, commercial manager at MinCom 5 in Syracuse, disagrees. "It would be disadvantageous to the real-estate broker," he says. "The banks would have a captive audience. 'You need a loan? Here.' It places the real-estate broker at a great disadvantage."

Matthew Rufrano, manager of the realestate advisory area of KPMG in Manhattan, agrees that it would affect brokers. "In terms of real estate per se, and space being hurt, it will have no effect at all," he says. "If banks are allowed to serve in the broker-age areas, they'll serve as brand-new competition."

Alan Gramet, a senior sales associate at CB Richard Ellis in Syracuse, says he is not worried about banks entering the real-estate market. "Banks don't know anything about real estate," he says. "They've given tons of bad loans."

Johnson says she is aware of the threat of banking companies dominating the market and says that is the point of the bill in Congress.

"I'm aware of the dangers of banking conglomerates gobbling up the market as opposed to a local Realtor who knows the community," Johnson says. "It wouldn't be a level playing field."

She adds that since banks are federally chartered, they have lots of advantages when borrowing money, and are also more likely will get bailed out if they go under.

Johnson contends that even if some real-estate agents offer mortgage products, it's not the vast array of banking products that banks have available to them, from securities to insurance. "It's a small percentage [of real-estate agents] that offer mortgage financing," she says.

Pulley, of the ABA, says that not every bank will want to join the realestate market, but they should be allowed that option.

"Right now, the bank is not allowed to walk you up to a house and say, would you like to buy this house?" Pulley says. "Yet, real estate can offer mortgage and brokerage, and other ba nk products. If it's so bad, they should stop doing it."