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preserve the status quo under which the banks, the OCC and the
convenience as banks' services are available in a larger
geographic area and in more locations.
No longer need the
customer choose between a financial institution which is
located either close to the home or the work place, but can
have access to his/her financial institution even in the course
of today's hectic and highly mobile life styles.
ATMs also provide greater time convenience to customers.
They allow consumers to transact business with banks more
quickly, and usually during more convenient and flexible hours
as many ATMs offer 24-hour access.
Perhaps the greatest benefit to consumers from shared ATMs
is that they result in bank services at lower cost.
number of network members and the large transaction volume
creates economies of scale which, in turn, reduce the cost of
customers without investing in expensive brick-and-mortar
branches or even in their own ATMs.
This is especially
important for small banks that often cannot afford the high
front-end investment expense.
Shared ATM networks also allow
participating institutions to benefit from proportionately
lower overhead costs as the volume of ATM use increases.
Effect of the proposed CSBS amendment
As you requested, I will also comment on the amendment
proposed by the Conference of State Bank Supervisors (CSBS).
This amendment would allow states to regulate the location,
ownership, operation and permissible functions of ATM networks
even when these networks are established by federally chartered institutions.
We do not support this amendment, as it
represents a step backwards for the bank customers.
enacted, it would encourage more restrictive state regulation
of ATMs in the future, a result clearly detrimental to bank
The CSBS version would allow states to prohibit the
participation of out-of-state banks in its networks
instance, Kansas law already prohibits an out-of-state bank
from participating in a network in that state.
number of state laws impose restrictions on the kinds of
services that customers may get through shared ATMs.
this amendment would allow states to regulate and supervise
networks established by federally-chartered institutions.
Needless to say, this would lead to red tape, duplicative
expenses, and unnecessarily burdensome regulation, the cost of
which ultimately will be borne by bank
Finally, we believe the CSBS amendment would result in
additional litigation and, therefore, delays in the development
of ATM networks, because it states that a shared ATM is only
presumed not to be established by a national bank.
presumption would place the entire issue back in the courts.
The bill should clarify for the courts the Congressional intent
with respect to ATMs, not invite the courts to ascribe motives
to this Congressional measure.
In conclusion, both the consumers and the banking industry
have benefitted from the advent of the ATM and shared ATM
Allowing the Marine decision to stand would mean a
giant step backward for the American consumer.
I urge Congress
to preserve the status of existing ATMs and the ability of
financial institutions to develop new shared networks by
enacting s. 2898.
Senator GORTON. Thank you, Mr. Mancusi.
Mr. Malarkey, you may proceed. STATEMENT OF JOHN E. MALARKEY, STATE BANK COMMISSION
ER OF DELAWARE, ON BEHALF OF THE CONFERENCE OF STATE BANK SUPERVISORS [The complete statement follows:]
Mr. Chairman, members of the Subcommittee, I am John E.
Malarkey, State Bank Commissioner for the State of Delaware, Vice
President and Chairman of the Federal Legislation Committee of the
Conference of State Bank Supervisors, on whose behalf I am testi
The Conference of State Bank Supervisors (CSBS) is the profes
sional organization of state officials who charter, regulate and supervise the approximately 10,500 state-chartered commercial and
savings banks of the nation.
Created in the early 20th Century as
a clearing house for the ideas of the state bank supervisors on
common problems, CSBS has evolved into the major champion of our
decentralized American banking and bank regulatory structures.
We are pleased to have this opportunity to testify regarding
s. 2898 and recent developments in the area of shared automated
teller machine networks.
The Conference supports the use of unmanned electronic funds
transfer systems to deliver better customer services.
this end, on October 31, 1980, our Board of Directors adopted a
policy of encouraging enactment of state statutes embodying the
States should encourage the establishment of unmanned
States should encourage the establishment and operation
States should supervise and examine state-chartered insti-
Should an amendment to Section 36 (c) of the National Bank Act (The McFadden Act) be found necessary to enable national banks to make use of the state statutes proposed herein, the Committee recommends that CSBS either support, or alternatively, agree to the necessary Congressional action.
we sought to encourage state exceptions to structur
al constraints, with such conditions, both operational and geographic,
as each state saw fit.
To the extent that an exception was created,
we felt that it should apply to national banks as well as state banks,
so long as the conditions on those exceptions applied as well.
Underlying these policies is a belief that a balance must be
struck between public interest in the expansion of service provision
and public interest in maintaining a competitive market for service
It is important to retain a desirable level of competition
for service needs by safeguarding the competitive equality of local
institutions and by avoiding concentrations of power.
This is true
even when dealing with shared ATM systems which maximize efficiency
from both a bank and bank customer standpoint.
High up front costs
and large-scale efficiencies in ATM systems renders shared ATM sys
tems both a mechanism to ensure local access and competitive equal
ity and a mechanism susceptible to centralized control by a few
In the short term, competition for participants
will guarantee access for smaller institutions and maximize user
In the longer term, economies of scale may tend to concen
trate and consolidate existing systems and limit entry of new com
petitors, absent safeguards such as
now contemplated in many state
Public interests in ATM location and function closely
parallel public interest in bank branching, as embodied in