Pubdate: Mon, 15 Mar 1999
Source: States News Service (US)
Copyright: 1999 States News Service
Author: Charles Davant

ALLARD WON'T PUSH BANK RULE BAN

WASHINGTON  March 9 (States) -- With the Clinton administration and
federal banking regulators poised to withdraw a plan to require banks
to monitor their customers' accounts for suspicious transactions, Sen.
Wayne Allard, R-Colo., has postponed his attempt to block the agencies
from implementing the requirements.

Officials from the Treasury Department, Federal Deposit Insurance
Corp. and Federal Reserve told lawmakers on Monday that the agencies
no longer plan to implement "Know Your Customer" rules, which consumer
advocates said would have forced banks to spy on their customers. In
light of that news, Senate Republicans decided not to force a vote
this week on a measure Allard wrote to block the rules.

"Due to the announcement of the FDIC director and assurances from the
three other banking regulators that they will withdraw the current
'Know Your Customer' regulations, I have agreed to discontinue my
legislative efforts on the Senate floor," Allard said. "My main goal
has been to stop these regulations from going into effect, and at this
point it looks like we have accomplished this goal."

FDIC Chairwoman Donna Tanoue said Monday she will recommend to the
agency's Board of Directors that it withdraw the proposed regulations,
which have sparked a firestorm of criticism from lawmakers, the
banking industry and the general public. During a mandatory comment
period, the FDIC received more than 200,000 e-mail messages and
letters -- almost all of then negative -- about the proposed rules.

The rules would have required banks and thrifts to prepare a profile
of each customer, establishing where that person gets and spends his
or her money. If there were any deviation from the normal pattern --
such as a big deposit or withdrawal -- the bank would be forced to
notify the FBI and the Drug Enforcmeent Administration. The rules were
drafted to combat money laundering and other criminal behaviors.

The Independent Bankers of Colorado, a Denver-based group that
represents the state's banks, applauded the decision to withdraw the
rules, which had been scheduled to take effect in April 2000.

"Our community banks in the state opposed the rules thoroughly," said
Barbara Walker, the group's executive director. "I think the message
has been very clear to the federal regulators that they have to
withdraw this rule. We looked at Senator Allard's initiative as just
another nail in the coffin."

Walker said the rules would have put the state's banks in the
uncomfortable position of spying on customers, which could discourage
people from saving money properly. She said the FDIC's plan would have
meant more onerous and costly federal paperwork for banks.

Allard's bill had been attached to an unrelated education measure the
Senate may approve this week, but Senate Republicans removed it after
the FDIC's announcment. In an 88-0 procedural vote on Friday, the
Senate showed widespread support for Allard's plan to block
implementation of the new rules, but that vote lacked the force of
law.

Allard said he reserves the right to reintroduce his bill if the
agencies back out on their pledge to drop the rules.

By Charles Davant
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MAP posted-by: Patrick Henry