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Current Events - 01/31/2000

ATM Access Fees: The Appeal — The litigation over the legality of ATM access fees continues, but currently at a slower pace.  As you know, the cities have appealed the permanent injunction granted to us by Judge Vaughn Walker.  Their opening brief is due on January 28, our response on February 25, and a final reply from them in mid-March.  The matter will then be assigned to a panel and set for hearing by the Ninth Circuit Court of Appeals.  While the matter is appealed, the preliminary injunction remains in effect.  I will keep you updated on our filings.

A while back I mentioned that the press concerning ATM access fees has taken a decidedly thoughtful and reasonable tone since our litigation was filed.  I wanted to share some excerpts from the Dan Walters column in the Sacramento Bee on November 30.  I just read it this week when it was sent to me by e-mail.  Dan is more than willing to take anyone on in his column (including the banking industry when he deems it necessary) and I found his comments in this article particularly appropriate.
 

“Seinfeld,” a self-proclaimed “show about nothing,” has been the most popular show of the decade...“Seinfeld,” as it turns out, also is an apt symbol for the politics of the decade.  The big issues that once dominated American political debate — the struggle between east and West for global supremacy, civil rights, poverty, crime and punishment, etc. — have almost disappeared from the public stage...But perhaps no “issue” has been more exploited, with less rational basis, than fees that banks impose on non-customers who use their automated teller machines (ATMs).  Unless one is foolish enough to use ATMs constantly to withdraw small amounts, these fees are of infinitesimal importance and certainly no more onerous than any other cost of living.  Nevertheless, with publicity-hungry politicians leading the charge, a couple of California cities have banned such fees and found themselves engaged in court battles with banks.  The ATM fee matter is a prime example of just how nonsensically trivial our politics have become.  While we are entertained in this theater of the absurd, truly important issues — transportation, water, education and land use, for example — are ignored  by those we elect.  And we let them get away with it.

March Primary : Water Bond — Pull Out Your Checkbook — As mentioned in the last issue of the Current Events, CBA has joined a broad coalition of business, labor, local government, environmental, agriculture and good-government groups in support of new Proposition 13 on the March 7th primary ballot.  This crucial $1.97 billion bond issue will be used to aggressively attack a broad range of water infrastructure needs which should benefit virtually every Californian by addressing groundwater contamination, sewer repair, pollution sources and decaying distribution systems.  Through better conservation, recycling, underground storage and more efficient reservoir use, Prop 13 will deliver new water for an additional 8 million Californians per year and its passage will entitle California to $600 million in federal matching funds.  California banks from the largest (Bank of America — $100,000) to some of the smallest are providing financial help to pay for the campaign to get the word out on Proposition 13.  Attached is a personal appeal from Steve Rosso, President & CEO, Pacific State Bank, Stockton, to join him and his bank by investing $1,000 in the future of California water.  As Steve says, “Remember, Water Is Life.”  Please send your check payable to Yes on Proposition 13, I.D.# 991968, 1915 15th Street, Sacramento, CA 95814.  Any amount will be welcome.

Bankers Legislative Day — It’s not too late, brother and sister.  You can still register and join us for CBA’s annual Sacramento Legislative Day, February 9, 2000.  Greg Wilhelm and his team have put together another valuable substantive program coupled with the important opportunity to visit with your local representatives in both houses.  This year, privacy legislation will be at the forefront.  To discuss these legislative implications for the banking industry we have assembled a panel of Senators Leslie and Murray and Assemblymen Papan and Cox (the chairmen and vice-chairmen of the banking committees in each house) to talk with us about the legislature’s views on privacy.  Our morning keynote speaker will be State Treasurer, Phil Angelides and our luncheon speaker will be State Controller, Kathleen Connell.  As you can see, all are important individuals in the area of banking and finance.  Call Yvette Ernst in our Sacramento office at 916/441-7377 ext. 200 for more information or to register.  We hope you can join us on Tuesday evening (February 8) for a reception with members of the legislature at the old Senator Hotel where our offices are located.  This is our only planned industry visit to Sacramento each year.  Your involvement and your participation with legislators make all the difference.  They need to know we care and they need to hear the industry’s voice directly.

Privacy — Although the marquee development of the Gramm-Leach-Bliley modernization bill may be the breaking of the barrier between banking on the one hand and securities and insurance on the other, the highly anticipated privacy regulations may be equally momentous and will affect all banks, large and small.  The federal banking regulators are required to finalize one of the most significant regulations in recent years by May of this year.  This means proposed regulations will be released soon, and word has it that the comment period will consist of all of 30 days!  Add to that the fact that the regulation will be drafted from scratch without any predecessor regulations to draw from, and that federal agencies are under obligation to issue (by one count) 40 different regulations as a result of the bill, and we have the makings of one scary regulation.  From what we know so far, the privacy regulation will include requirements regarding “consumers,” a definition not contained in the bill itself.  These include persons who are not bank customers, including denied loan applicants and one time purchasers of a product or service.

While the concept of opt out is eminently more favorable to the industry than opt in, making opt out work will be no small feat.  For example, banks will have to develop procedures to ensure that nonpublic personal information of those who opt out, including non-customers, is not improperly shared by all other departments of the financial institution.  But how does a bank ensure that a one time purchaser of a cashier’s check is properly opted out when that person later becomes a credit card customer believing he or she has already opted out?  Until banks reach that technological holy grail where each and every system and product in the bank is integrated, banks will have a lot of work to do to make opt out work.

CBA is gearing up with several of our volunteer committees to provide comments to this and other proposals as they come down. We encourage each of you to do the same. We will keep you informed by highlighting the key issues.  Also, we enthusiastically invite your comments and will be happy to incorporate them into our letters. Check our website at www.calbankers.com for updates. Telephone Leland Chan at 415/284-6999 ext 214 with your comments or questions. He is our point man on these matters.  This will be a busy and extremely important year for bank regulation.