The Dow has had four-figure losses in the last two weeks. WorldCom is bankrupt. Arthur Andersen is on trial. The end-of-session conference negotiations on corporate reform are the focal point of intense national interest.

Compared to these hot-button issues, who cares, in a heavy news week before the summer break, if Congress approves a real estate lobby initiative, quietly repealing proposed Federal Reserve regulations to allow more banks to engage in the real estate brokerage and property management business? Anyone who ever buys real estate or gets priced out of the market or cares about the national benefits of a free and open marketplace should care. At stake is the competitiveness of the real estate market and, amid burning concerns over the integrity of business and the mechanisms that govern it, the question of whether financial services policy is to be treated as a political football, where the public interest can be overridden by a powerful lobby.

This month the National Association of Realtors prevailed upon the House Appropriations Committee to pass an amendment preventing the Treasury from finalizing until at least September 2003 the rule proposed by the Fed. That rule, pursuant to the Gramm-Leach-Bliley Act, would let banks offer real estate brokerage services. A floor vote is expected in the House this week.

Passing that ban would be a loss for consumers as well as bankers. Banks are already engaged in real estate activities such as lending, leasing, and settlement services. Allowing them to add brokerage only helps the integrity of the real estate market by furthering competition, lowering prices, and increasing choices for consumers.

Real estate brokerage services have been protected from competition by national banks until now. However, federal thrifts and state-chartered banks in 26 states can already own real estate brokerage subsidiaries, and that hasn't hurt either industry one bit.

Yet the National Association of Realtors complains that big banks would capture the real estate services market by unfairly bundling brokerage with other services and locking in consumers. But this is clearly specious. For one thing, this sort of bundling is illegal. For another, the relevant analogy is the insurance field. Once banks were permitted to enter the insurance brokerage business, they didn't destroy the insurance market. On the contrary, the market benefited from greater competition.

Real estate interests also like to make a completely contradictory argument as the alternative: Since banks have not become major players in the real estate market so far in the 26 states that allow them to participate, they say that this means brokerage is unprofitable for banks. Thus, banks entering the field would lose money and jeopardize their safety and soundness. While we appreciate the realtors' concern, I am certain such business decisions are best left to the bank chief executives.

Some insurance interests tried to make the same specious argument during events in 1999. They said that selling insurance was so risky that, in the wake of the S&L crisis, banks' solvency was at issue if they began to sell insurance products. Though insurance selling is not without some risk, it is clearly safer than making loans and taking on the whole risk of default, as banks do every day.

Unfortunately, none of this prevents some real estate interests from making the discredited argument that real estate brokerage will undermine banks' safety and soundness. To allow special-interest protectionism to tie the hands of the Treasury and the Federal Reserve wouldn't just be a loss for consumers and bankers, but for sound fiscal policy and the economy as a whole.