is not yet a "cashless society", but the operation of any retail business on a cash-only basis is, by any standard, obsolete. Credit card systems and check verification systems have evolved, but shared ATM systems and the developing "point of sale" systems constitute far more effective payment mechanisms.

In early 1983 Wegmans, following the lead of other retailers, decided to establish its own network of ATM machines. A primary reason for this decision is Wegmans belief that it can provide better quality and broader service than could be provided by several other ATM networks, each representing a different group of banks. Wegmans objective was and is to attract the

maximum number of financial institutions, large and small, to its system. Thus, Wegmans contracted with both the existing Metroteller and Harmony Systems to participate in Wegmans ATM program, and it is also free to contract with other financial institutions.

At the time the litigation against Marine Midland and Wegmans was commenced (August 1983) users of the Wegmans ATM system included Marine Midland, Manufacturers Hanover, N.A., Salemanca Trust Company and the

Griffiss-Oneida Credit Union. We projected that by the end of 1984 not less than 23 financial institutions would participate in the Wegmans ATM system.

Having found that under federal law the usage of

the Wegmans ATM in Canandaigua constituted branch banking by Marine Midland, the District Court then looked to New York State law to determine if the branch could lawfully be established by a state bank. Under the home office protection provision of the New York banking law, no state or federally chartered bank can branch into Canandaigua which is the home office of the Canandiagua National Bank and Trust Company, one of the plaintiffs in the action. Thus, the court enjoined the customers of Marine Midland from using the Canandaigua ATM. As to the ATMs located in other retail locations, usage by Marine Midland and other participating banks has continued, but with some degree of uncertainty as to whether branch approval must be obtained from the Controller. Canandaigua ATM is now only available for usage by the customers of certain participating federal thrift institutions and credit unions since their ATM operations are not subject to branch restrictions.

The

Canandaigua is a community of approximately

12,000 with a substantial seasonal population of persons owning cottages and camps in the Finger Lakes and Bristol Hills area. The area supports an 80,000 plus square foot grocery store--a big facility by any measure.

We believe

that a majority of our customers at Canandaigua have primary banking relations with banks other than the

Canandaigua National Bank and Trust Company.

However, as

a result of the District Court decision our customers in Canandaigua cannot use our ATM to transact banking business with any of the major commercial banks or state chartered thrift institutions serving the area. Indeed,

our ATM facility in that store has been rendered useless for the great majority of our customers.

The economic effect of treating shared usage of ATMS as branch banking is to preserve the state law monopoly of The Canandaigua National Bank, but at considerable sacrifice of banking services to the public. Whatever the history behind "home office protection", this result is highly undesirable to those who really count consumers in the marketplace. The effect of S. 2898 would be directly the opposite of this undesirable result banks would be secure in participating in the ATM systems established by others. In our case, enactment of S. 2898 would mean that our Canandaigua store could again offer ATM access to Marine Midland and any other bank that agrees to participate, including The Canandaigua National Bank and Trust Company.

In other parts of the United States, the impact
Uncertainty as to

of S. 2898 would be even more vivid.

the ability of national banks to offer their customers ATM access over state lines or within unit banking states

would be eliminated. The path would then be clear for the development of modern electronic banking to its full potential.

There is no reason why a bank's participation in

a shared ATM system need be regarded as the conduct of a banking business at branch locations. The only advocates of this result that we have encountered are 'other financial institutions with some vested interest,

attacking ATM systems as an intrusion on their protected turf. Modern technology has provided means of accessing banking services without requiring the customer to visit the bank in person. The need for such access by electronic means is strong. It can be fulfilled by ATM systems and the broad range of more sophisticated electronic banking facilities now in the planning stages. Enactment of S. 2898 will settle the issue which now threatens this development.

Senator TRIBLE. I want to again welcome you here today. You served for many years on Capitol Hill yourself, and I recognize that distinguished service, as administrative assistant to Senator Brooke of Massachusetts, and I know he served as a member of this committee. So you have been long involved in those issues affecting the financial services industry and so your testimony today has special weight.

Mr. Gasteyer, please proceed.

STATEMENT OF PHIL GASTEYER, SENIOR VICE PRESIDENT AND LEGISLATIVE COUNSEL, U.S. LEAGUE OF SAVINGS INSTITUTIONS Mr. GASTEYER. Thank you, Mr. Chairman. I am Phil Gasteyer, legislative counsel for the U.S. League of Savings Institutions here in Washington.

The league supports S. 2898 and asks for its passage by this Congress. Frankly, Senator Trible, your statement-and explanation both today and in the Congressional Record-was persuasive with

us.

Senator TRIBLE. Say no more, Mr. Gasteyer. Say no more. Thank you very much.

NEED TO RETURN TO THE STATUS QUO

Mr. GASTEYER. Our primary interest in this legislation is to return to the status quo and avoid potential disruption in the shared ATM networks created by the district court decision in New York. As Mr. Brumbaugh explained earlier, savings institutions participate in many of the regional and other ATM networks spreading across the Nation.

Without national bank participation, some of those networks no doubt will be dismantled and, in others, the remaining thrifts and nonmember State-chartered banks will be faced with higher user fees.

Our laws and regulations clearly permit regional or interstate participation by federally chartered thrift institutions in shared ATM networks. In dealing with the issue before you today, we strongly urge that no change be made in the statutory or regulatory framework for savings institutions' remote service units. That is, if the language of the bill is somehow modified-and, of course, we're not suggesting that it should be modified.

The U.S. League cannot support the additional language proposed for S. 2898 by the Conference of State Bank Supervisors. It appears to us to prejudge some of the broader and very complex issues regarding the McFadden Act and the Douglas amendment, a review that we would recommend be postponed until another Congress.

It is also our understanding that you, Senator Trible, intend by this limited legislation simply to restore the status quo, not to somehow or other expand the functions performed for national bank customers at the shared ATM terminals. We would hope that that point be made clear in the surrounding legislative history.

I appreciate this opportunity to present our views and would be happy to answer any questions.

[The complete statement follows:]