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preserve the status quo under which the banks, the OCC and the

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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.

The large

number of network members and the large transaction volume

creates economies of scale which, in turn, reduce the cost of

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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.

Second, a

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. 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

fying today.

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.

CSBS Policy

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
electronic funds transfer (EFT) systems within the states
by banks or others which, by contract or agreement, will
enable customers of local financial institutions to obtain
financial services when customers are away from their banks.
This procedure will enable individual banks better to serve
their customers and retain their customer bases.


States should encourage the establishment and operation
of such EFT systems subject to reasonable requirements as
the state may choose, including the nature and geographic
scope of transactions to be offered.


States should supervise and examine state-chartered insti-
tutions providing EFT services for customers of institutions
located elsewhere; and the Comptroller of the Currency or
the Federal Home Loan Bank Board should supervise and ex-
amine respective federally chartered institutions.


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.

In essence,

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

large institutions.

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

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