Consumers concerned banks will disclose private information

Four out of five home buyers and sellers worry that banks will use consumers' private, confidential financial information to market them for real estate services if the government allow banks to enter real estate brokerage, according to a new survey.

The survey, by Yankelovich Partners and released by the National Association of Realtors, found that 89 percent of home buyers and sellers fear that banks, if they enter real estate, will violate consumers' privacy by sharing their confidential financial information with the banks' real estate subsidiaries. Three in five consumers don't believe federal banking laws adequately protect their privacy and 83 percent of home buyers and sellers said it's not a good idea to give large banks the power to act as real estate brokers. Under current law, subsidiaries of a bank holding company may share personal financial data without consumers' consent.

"This study reveals the deep concerns consumers have about the lack of privacy protection provided by banks and current banking laws. Extending real estate brokerage powers to banks will only make the situation worse, according to the vast majority of Americans," NAR President Richard A. Mendenhall said.

The survey provides more detailed data on consumer attitudes towards bank privacy protections than a poll released by NAR in February. That study found that 68 percent of consumers believe they would be hurt because bank-owned real estate brokerages would have access to all of home buyers', home sellers' and bank account holders' personal financial information. Fifty-eight percent of respondents in the poll conducted by Public Opinion Strategies in early February said they believe banks are too powerful already and should not be allowed to own real estate brokerages.

Despite claims by the banking lobby that real estate brokerage is not competitive, the Yankel-ovich study also found that Americans believe banking and real estate brokerage to be equally competitive.

NAR opposes the regulation proposed by the Federal Reserve on the grounds that it would lead to less competition and higher costs to consumers with "bundle" and cross-sell products and services through real estate brokerage subsidiaries. NAR also has expressed concern that banks would be able to share confidential customer financial data with their captive real estate brokerages, jeopardizing privacy and creating an unfair competitive advantage over independent brokerages.

NAR announced its opposition to the proposed regulation in December 2000, following the decision by the Federal Reserve's Board of Governors to seek public comment on the proposal. Mendenhall has urged Realtors to write comment letters to the Federal Reserve and Treasury to oppose the regulation, which could take effect if the Board of Governors decides real estate brokerage and property management are financial activities or incidental to a financial activity.