As foreclosures escalate, U.S. Treasury Secretary Henry Paulson is heading a presidential working group that he says wants more regulation on banks, including federal and state oversight on mortgage lenders.

What a difference a recession makes. Back in 2004, it was the Office of the Comptroller of the Currency, a division of the Treasury that oversees banks, that issued new rules that national banks should be exempt from state oversight. Since 1863, state law has applied to national interstate banking in four areas: branching, consumer protection, fair lending and community reinvestment. But banks complained that doing business across state lines meant complying with too many regulations raising costs. Now state-chartered banks are at a competitive disadvantage.

Over numerous objections, including the National Association of Realtors, the NAACP, and others, state consumer protections went by the wayside as banks like JP Morgan and many more applied for federal charteras fast as their little greedy legs could carry them. Between 2003 and 2005, the share of banking assets held by national banks shot up to 64 percent from a 20-year average of 55 percent.The share of deposits held by out-of-state national banks increased from 28 percent to 38 percent between 2004 and 2005 in states with predatory lending laws, while their market share in states without such laws remained fairly stable at around 29%, noted the Chicago Fed, in a 2006 study.

By 2007 mortgage fraud, appraisal pressures, and securities manipulations created huge profits for banks through mortgage lending, but resulted in "the highest number of delinquencies and foreclosures, rapid and near complete shutdown of the non-conforming secondary market, and hundreds of announced closures of mortgage originators," reports the Mortgage Bankers Association.

It's a little late for regulations, isn't it, Mr. Paulson?

I warned you earlier in my many articles relating to the Conspiracy to Put Realtors Out Of Business, that the end game of federal protection of banks was about getting in on the HUD1.

And here's how it's going to play out. The dual banking system, one of our nation's many checks and balances, is teetering.

The presidential working group has recommended that "state financial regulators implement strong nationwide licensing standards for mortgage brokers," according to the group's report, released Thursday.

What that does is make it more expensive for state-regulated mortgage lenders to compete with national mortgage lenders who don't have to comply with state regulations.

How long do you think they'll be able to keep up?

As the federal banks gain in market share, the feds will have to implement even more oversight and that costs taxpayers money.

One way to pay for the oversight is to implement a federal transfer tax on every piece of property that's sold.

If that happens, homebuying will get even more expensive because the money won't be used to regulate banks. It will merely pay for more programs that appear to regulate banks.

This is a land grab, folks. Not a solution.

Published: March 14, 2008

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.