In Opposition, O'Keefe Points to New Deal Legislation

NEW YORK CITY-Last month the National Association of Realtors released its survey on the issue of a regulation proposed by the Federal Reserve Board and the US Treasury to allow financial holding companies to enter the real estate industry in a brokerage capacity. The survey found nearly two out of three consumers oppose the regulation and believe the federal government should oppose it to protect consumers. Brokers here agree and contend that in the long run it is the consumer that will suffer.

Raymond T. O’Keefe, CRE, president of Grubb & Ellis, based here, agrees with the NAR’s position. O’Keefe points to the Glass Steagall Banking Act of 1933 that was part of Franklin D. Roosevelt’s New Deal legislation and prohibited investment banks from underwriting or dealing in corporate securities, except government bonds; having any deposit business; and being brokers and money managers. Investment banks have entered money market funds and cash management since then and an increasing number of exceptions to the Act have been passed.

O’Keefe argues the Act prevents “exuberances” on the part of banks and that it was the banks’ desire to be involved in such far-reaching industries that they were spread too thin in their attentions. “It’s part of the reason we had the crash in 1929,” he notes. In fact it was the belief that banks were to blame for the stock market crash and ultimately the Great Depression that led to the Act. Recently, however, banks have raised the issue, making it controversial among legislators. Congress nearly repealed the entire Act.