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H.R. 1105 permanently blocks banks from real estate

March 14, 2009

Pertaining to or dealing with a variety of topics at one time; as, omnibus legislation; an omnibus budget bill.

There was one good thing that came out of this soon to be omnipresent, omnibus appropriations bill that was signed by the President this week.    And that was a bill blocking banks from jumping into real estate.  This is a very good thing because if it’s not apparent to you banks do not do well in real estate.  If they were good at it they wouldn’t have properties sitting on their books….  But they do!  

The National Association of Realtors have been pushing to get this bill passed for almost eight years.   And the exaggerated statement I made above is not really the problem.  That is just my opinion.  The real problem is that banking is financial in nature and real estate is commerce.  The bill that was passed provides a clear statement that the two should not mix.   By having this delineation in place banks can stick to extending loans and credit for the commerce of real estate to take place.  And I hope that they start doing that in a predictable, proficient, and prudent manner soon.  See Dangers of Mixing Banking and Commerce.

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