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Senator GORTON. Our first panel consists of Mr. Mancusi, from the Comptroller of the Currency; and Mr. Malarkey, who is the State Bank Commissioner of Delaware but who is speaking on behalf of the Conference of State Bank Supervisors.

I note, gentlemen, that if all the witnesses were to read the testimony we have before us we would be here until 1 or 2 o'clock just listening to that reading. I assure that all of the members of the committee are literate and capable of reading them for themselves. I would appreciate your summarizing your statements and all of them will be included in the record in full as if read.

With that, Mr. Mancusi, you may proceed.

STATEMENT OF MICHAEL A. MANCUSI, SENIOR DEPUTY COMPTROLLER FOR NATIONAL OPERATIONS, OFFICE OF THE COMPTROLLER OF THE CURRENCY

Mr. MANCUSI. Thank you, Mr. Chairman. In keeping with your request, I would like our statement entered into the record and I do have several brief comments that I would like to make that hopefully will summarize that statement.

[The complete statement follows:]

STATEMENT OF

MICHAEL A. MANCUSI

SENIOR DEPUTY COMPTROLLER OF THE CURRENCY

BEFORE THE

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
UNITED STATES SENATE

SEPTEMBER 19, 1984

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Mr. Chairman and members of the Committee, I appreciate the opportunity to express the views of the Comptroller's Office on S. 2898 The Banking Convenience Act of 1984. These comments do not necessarily represent the views of the Administration. This bill would preserve the ability of national and state member banks to participate in shared automated teller machine (ATM) networks, and protect the widely-accepted consumer benefits which are now placed in jeopardy because of the recent district court decision in Independent Bankers Association of New York State v. Marine Midland Bank.

S. 2898 provides that a shared ATM would not be considered a branch of a national bank if the ATM is not owned or rented

by that bank. Thus, it would preserve the status quo by codifying the current interpretation of law that led to national and state member bank participation in shared ATM networks. S. 2898 is a timely and important piece of

legislation which reverses the broad and harmful precedent set Because of the importance of ATMs to

in the Marine case.

consumers, and because of the detrimental effect that the

Marine decision could have on ATM networks, I strongly support S. 2898 and recommend its prompt passage.

Growth of ATM networks

As you know, in 1976, the District of Columbia Circuit Court held in IBAA v. Smith that an ATM, which is owned or rented by a national bank, is a branch of that bank, and therefore restricted by applicable state branching laws. Consequently, the Comptroller interpreted the Circuit Court's opinion to mean that ATMs that are not owned or rented by a bank are not branches of that bank for purposes of the Federal banking law. The practical effect of this reading is that if a national bank provides customers access to an ATM network established by other institutions by paying, for instance, transaction fees, such access is not restricted by state branching laws or the Federal prohibition on interstate branching.

Relying on the 1976 IBAA decision, both national and state member banks have been able to participate in the dramatic growth of ATM networks. In 1980, there were relatively few

networks. Today, there are at least 200 regional networks,

seven of which operate nationwide.

Five of the national

networks encompass more than 9,000 ATMs and over 5,000

financial institutions.

The nine largest regional networks

consist of over 7,000 ATMs and 2,700 financial institutions. Put differently, as of 1983, the customers of 7,500 banks were using 16,000 ATMs that were connected to shared networks. These ATMs processed about 60 million transactions a month. Thus, shared ATM networks have become an integral part of the nation's commercial fabric.

The Marine decision has placed all these extensive network arrangements, and the public benefits derived from them, in jeopardy. In that case, the district court held that, by allowing its customers to use an ATM established by a grocery store, Marine Midland Bank was engaged in illegal branching. This decision has already had a chilling effect on the development of new networks.

Banks are putting plans for

future shared networks on hold until the outcome of the Marine case is clear. If the decision is upheld, not only will the future development of networks be halted, but the existing networks would also become unravelled. Many institutions would stand to lose millions of dollars invested in currently

operating shared networks.

Finally, and most importantly, the

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