In the last two years, the Department of Justice has opened investigations into NAR policies regarding the regulation of virtual office websites' (VOW) datasharing from MLSs, sued the Kentucky Real Estate Commission over its consumer rebate regulations, and is now "urging" the Oklahoma and Texas Real Estate Commissions to back off of proposed rule changes that would limit fee-for-service brokerage models.

The scrutiny of the Federal Trade Commission and the Department of Justice into various actions of the real estate industry has some wondering -- why is the real estate industry suddenly of such interest?

In any kind of investigative action, the first questions to be asked are who, what, when, where and why. What is significant? Who stands to benefit? Who took what action, and did those actions make sense?

For good investigators, it's the anomalies that stand out. Anomalies start the investigation process all over again -- who, what, and so on, until the situation is solved, explained, ruled upon or otherwise closed. As Sherlock Holmes suggested, "whatever is left, however improbable, is the truth."

Obviously, the real estate industry (who) has blipped itself onto the FTC's and DOJ's radar causing the watchdog agencies to investigate, sue, and make recommendations to (what) various real estate entities over the last two years (when) because of sudden changes in the industry, mostly due to advances on the Internet, that are enabling new competitors to try new business models that existing competitors might not like (why).

The new entrants are claiming that certain policies, rules and statutes are anticompetitive (significant). The FTC and DOJ have taken various actions from investigating the NAR, to suing the Kentucky Real Estate Commission, to urging the Texas and Oklahoma legislatures not to approve rules that limit limited service brokers to a higher standard of conduct toward their clients.

Are these actions ordinary or are they anomalies? In and of themselves, they appear ordinary, but it's the intensity and the number of fronts that are unusual. The DOJ's virtual office website investigation is ongoing, but nothing's happening. The NAR is in limbo about whether to put through its policy recommendations or not. At this rate, the DOJ will never have to issue a finding. And it's an anomaly that the DOJ and FTC are writing recommendations on state matters of licensing, as suggested by NAR's general counsel's letter to the associations.

But there's also a cause and effect. Assuming that the DOJ is right and the real estate industry is wrong about wanting to adhere to higher standards, what happens to real estate if the DOJ gets its way? Who benefits? If the FTC and DOJ are successful in their crackdowns on the real estate industry, the beneficiaries will be consumers who will see commissions fall. Also benefitting will be the brokers who have complained to the FTC and DOJ. They operate virtual offices that use other people's listings; rebate money or prizes to consumers (which is outlawed in some states) using discounts instead of service standards to lure consumers; and supply limited service, or MLS-only-listings to sellers, while skipping the time-consuming, profit-eating, consumer-protective tasks of agency. Who wouldn't want the freedom to work like that?

Some day, consumers will be able to advertise in and search the MLS with little help from an agent. And if consumers can do so much of the work themselves, it stands to reason that other fiduciary barriers will also break down, kicking settlement duties to attorneys or title companies, for example. As brokers lose profitability, they will have to jettison more and more services. It could soon get to the point where no one will need a license to sell real estate, because there won't be fiduciary services anymore.

The gains for any practitioner will be short-lived as pricing pressures will continue against the discounters, rebaters, etc. If an MLS-entry is $495, why shouldn't it cost $395, $295, and so on? Unless there is some kind of new opportunity in real estate, existing business models will fail.

Now, who do we know who wants a new opportunity in real estate? Banks.

Banks can leverage their size and assets to take over the floundering, independent contractor-based real estate industry. Banks would love nothing more than to see the real estate industry drive itself into oblivion through price competition -- all in the holy name of the consumer. Then they can pay out-of-work Realtors $8.25 an hour to do the same job in the bank they used to do for $100 an hour out of their cars.

Who wants banks to have that opportunity? For one, Congressman Mike Oxley, Financial Services Committee Chairman (R-OH). Oxley shot to national prominence as the first committee chairman to look into the transgressions of Enron and Worldcom, stock scandals that nearly brought the stock market down.

With a voting record that President Bush has got to love, Oxley, along with Ranking Member Barney Frank (D-MA), requested the Government Accountability Office (GAO) to study competition in the real estate industry in March, 2005. Specifically, they asked the GAO to "report on the size of the U.S. residential real estate market; the number of closed transactions and total value of property sold last year; on the current number of licensed real estate agents; to compare the increase in housing prices with the rate of inflation over the past five years; and how and whether consumers benefit from competition in the residential real estate brokerage market. Additionally, they asked, according to the NAR, whether state-chartered depository institutions that engage in real estate brokerage and settlement services "have any negative effects on competition or consumers."

While NAR can argue with GAO staff that the real estate industry is one of the most competitive in the nation; that homeownership has grown to unprecedented levels; and that real estate has sustained the economy for over a decade, that might not cut ice with Oxley. He is a "true believer" like Bush, a passionate, even zealous far-right politician. He might well be stinging over the defeat of banks by the real estate industry so far.

So, at the risk of overreaching, what better way to defeat an opponent than to take away his/her profitability? As Realtors fall by the wayside in economic defeat, the numbers supporting the NAR diminish, seriously damaging its lobbying power. Without the NAR to object, Oxley gets his way -- no more hurdles to banks in real estate.

Farfetched? Consider the following:

• In 2002, NAR lobbyists, among others, were able to get half of the House to sponsor the Community Choice in Real Estate Act, H.R. 3424, which would prevent the proposed banks-in-real-estate regulation under consideration by the Federal Reserve Board and Treasury Department from taking effect. Since then the banks-in-real-estate deal has been dead in the water, but what better way to get it going again than to weaken the real estate industry, particularly the associations of the NAR?

• In 2003, the omnibus spending bill was passed by both the House and Senate which included a provision that prohibits the U.S. Department of Treasury from finalizing a rule that would allow banks to enter the real estate business.

• In 2004, the Office of the Comptroller of the Currency, a division of the U.S. Treasury and administrator of national banks, issued a rule preempting national banks from state law, effectively allowing them to provide real estate services without being licensed.

• NAR objected by letter . "Congress needs to reign in these regulators. Only Congress should be able to make these types of public policy positions. They should not be left to unelected regulators. Congress should overturn the OCC preemption rule."

• Oxley supported the rule.

• On January 25th, 2005, the "Community Choice in Real Estate Act," S. 98 was reintroduced in the U.S. Senate. Senators Wayne Allard (R-CO), Richard Shelby (R-AL), Conrad Burns (R-MT), Johnny Isakson (R-GA), Hillary Clinton (D-NY), and Russ Feingold (D-WI) were the original cosponsors of the bill. S. 98 would permanently ban the big banking conglomerates from the real estate brokerage, leasing and property management business. Last year, the Senate included a permanent prohibition in the Omnibus Appropriations bill, but that provision was stricken during the final hours of conference negotiations with the House. The one year prohibition was included in that legislation. The House companion bill, H.R. 111, was reintroduced on the first day of the new 109th Congress.

While no proof of connection exists between Oxley and the sudden interest of the FTC and DOJ into the workings of the real estate industry, the coincidence of timing and cause and effect can't be ignored.

Why would the DOJ and FTC help Oxley? They wouldn't, not directly. Their job is to protect fair trade and consumers, but whether they realize it or not, they are the perfect pair of Dobermans to drive the real estate industry over the fence.

"Shame on them if they would respond to pressure from Oxley to go after us," says Laurie Janik, general counsel for the NAR.

Keeping the NAR busy on other fronts divides its resources and its ability to fight banks in real estate. It's a classic war tactic, if it's true.

If it's not true, it's awfully convenient.