The irony, sweet and otherwise!!

This post is a little off topic, but does involve a thread extending back to the Feb CAR meetings.

A few years ago (2001--I looked it up) there was an effort by the banking industry (aided by the Fed) to get into real estate, ie the business of actually assisting in the buying and selling of homes and even managing them. The Gramm-Leach-Bliley Act of 1999 was variably interperted by different factions and if real estate was considered a financial activity there was an argument to be made in favor of the banks having broader involvement in real estate.

Predictably, the real estate trade organizations went off like a cheap bottle rocket, spending a large pile of money lobbying congress, the public, their own members and anyone in ancillary trades. They strutted and postured year after year but low and behold recent legisation, passed in 2009--by a Democratic congress and signed by a Democratic President, is being taken as a victory over banking.

Here's the problem. What did the role of banks become after the finanical meltdown, subsequent bailouts, in the prevalent short sale/REO environment that arose after houses INDEED BECAME financial in nature?

No matter how you spin it, BANKS ARE IN REAL ESTATE--TODAY. They set prices, commissions, adjust terms, have their own contracts, they even manage property. Banks control a substantial portion of the real estate market and they do it with big help from the taxpayers. In some areas they control over half the listings. True, there are real estate agents involved, but the business activities they perform are not like those in a traditional real estate market.

What are the trade organizations doing? Well, they just declared victory over the banking industry in 2009, limiting their options just a bit. They are diligently creating seminars covering how to retain a modicum of sanity dealing with short sales and REOs, but warning of huge liability associated with these new business partners--the DEFEATED BANKING INDUSTRY. It seems they don't always play using conventional real estate type rules. Wonder who has a bigger lobbying budget?

Where does all this leave the public? Oh yeah, well those financial instruments that they used to live in suffered some volatility in value leading to a loss of equity and, well, you know, if you got no equity things just get tough all over--ask all the real estate agents that lost their homes.

Time will tell who the real winners are in this lopsided contest, but members of the public have very slim odds at this point.