March 27, 2006

The Honorable Bill Frist
Majority Leader
United States Senate
S-230 The Capitol
Washington, DC 20510

Dear Senator Frist:

We, the undersigned trade associations, represent banks of all sizes from all across the country, and we are writing to ask you to firmly reject the efforts of the National Association of Realtors (NAR), which, in order to convince its members to sign a form letter to Congress, is making irresponsible charges about our banking system and its regulation.

The pretext used by the NAR for its campaign consists of three recent letter rulings by the Office of the Comptroller of the Currency (OCC) that are consistent with a long line of precedents. With respect to these three letters, the Chairman of the House Committee on Financial Services, Michael Oxley, stated, “The actions that the OCC has taken in its authorization letters are reasonable, well within the law, and within precedent.”

Our concerns about the NAR’s campaign are twofold: first, that it could have very negative consequences for a number of important public policy goals; and, second, that it could undermine confidence in the best banking regulatory structure in the world. On the first point, the NAR’s policy proscriptions would erode support for activities that banks have undertaken for decades in the development of mixed-use bank buildings and the use of tax credits by banks to support government-favored purposes. Up until now, approvals of such activities have been routine and uncontroversial. We believe that our communities would be worse off in many ways if, as the NAR campaign suggests, banks were prevented from using their offices and related buildings for anything other than the bank, thereby banning the mixed-use buildings that have served as the core of so many efforts to revitalize the downtowns of communities large and small.

If the NAR achieved its apparent goal of denying banks the ability to take targeted equity interests, which are carefully structured to be the functional equivalent of a loan transaction, banks would be excluded from many financing programs that leverage low-income housing tax credits, New Markets tax credits, historic rehabilitation tax credits, and renewable electricity production tax credits to attract significant capital to achieve important public policy goals. We believe that America would be a poorer place, that significant economic growth and development would be lost, if these longstanding bank community investment practices were the casualties of the NAR campaign.

Furthermore, the allegations of the NAR could impact the strength and vitality of our banking system, which is central to a resilient, growing economy. Our banking system is healthy partly because the regulatory system in which it operates is both strong and flexible. The NAR’s public campaign, conjuring up ominous phantoms of economic catastrophe, is not only misleading, it is dangerous. The public’s confidence in our banking system should not be falsely undermined to further a political agenda.

We strongly urge Members of Congress to reject this misleading and irresponsible campaign by the National Association of Realtors.

Sincerely,