ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, July 12, 1996 TAG: 9607120042
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
Opponents of new ATM fees launched a new attack Thursday, arguing the fees could cause consumers to leave small community banks - and drive small bankers out of business.
Paul Green, a Boston-area banker representing the Community Bank League of New England, said he fears customers will flee to large banks with many cash machines to avoid the new surcharges.
``This is not about reimbursement fees for the ATMs. It's about absorbing new market share and penalizing the customer for being with another bank,'' said Green, president of the Massachusetts Cooperative Bank of Dorchester. ``We are very concerned about our survivability.''
Green testified at a Senate Banking Committee hearing on a bill sponsored by the panel's chairman, Sen. Alfonse D'Amato, R-N.Y. The billthat would prevent banks from charging customers twice for using a cash machine that is not owned by the consumer's bank.
A similar bill sponsored by Rep. Bernie Sanders, I-Vt., is pending in the House, but neither proposal has been scheduled for a committee vote.
In April, major ATM networks agreed to permit banks to charge these additional fees, known as an ATM surcharge, to recoup their investment in the machines and their operation. The surcharge, typically $1, is in addition to an interchange fee, which ATM networks charge banks for using their computer lines.
D'Amato, whose bill would prohibit the surcharge, but not the interchange fee, strongly condemned banks for the new fees, aligning himself with some of the committee's most liberal Democrats, such as Sen. Barbara Boxer, D-Calif.
``Surcharging is not only anti-consumer, it also may be anti-competitive and harmful to small financial institutions,'' D'Amato said.
Small banks and credit unions can't afford to install the machines, which can cost more than $200,000, so their customers instead access their accounts through other banks' cash machines, using the national ATM networks such as Plus and Cirrus.
``Surcharges may result in predatory practices that are unfair to small institutions and their customers,'' D'Amato said.
The ATM networks have denied charges that the fees undercut small banks. Phillip Hudson, a Utah banker representing the American Bankers Association, argued the ATM machine is a valuable service provided by banks.
``It is perfectly reasonable for owners of these machines to charge for their use if they so choose,'' Hudson said in prepared remarks. He said the banks are required to disclose surcharges and consumers can choose not to use the machine, opting to deal with a human teller instead.
Sen. Richard Shelby, R-Ala., said the D'Amato fee ban was an attack on free enterprise and harkened back to the days of federal price controls.
``I do not believe that the federal government should micro-manage any private business,'' Shelby said. There's no evidence banks are colluding to gouge consumers, he added.
In response to the argument that ATM surcharges threaten the small bankers, Shelby said the community bankers were basically asking Congress ``to protect you in the marketplace.''
But Green, the Massachusetts banker, argued that ATMs have become such a part of the average American's life that Congress can justify regulating fees.
``ATMs are almost a becoming a utility, a public utility,'' Green said. ``So, we have an issue developing here which is free and equal access to ATMs by all consumers without a monopoly being set up.''
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