Mr. Chairman, I first want to thank you for holding this hearing on the practice of Automated Teller Machine surcharging. I would like to welcome Wayne Cottle, President of Dean Cooperative Bank in Franklin, Massachusetts who is testifying for the Community Bank League of New England. I would also like to welcome Richard Bolton, Jr. who is President of Charter Bank in Waltham, Massachusetts and is testifying for the American Bankers Association.
Everyone, no matter how big or small their bank account, should have the freedom and flexibility to rely on the convenience of ATM machines without suffering unnecessary surcharging or double charging. It is unfair for banks to charge consumers an additional hundred dollars or more each year simply to access their own money.
I am a great believer in the free market - not the Federal government - dictating fee structures for financial institutions. And I do not begrudge the banks' profitability -- thanks to the economic boom we have seen during the Clinton Administration, banks and all industries are better positioned then they were in the dark days of bank and S&L failures. But I believe there is a sense of fairness that has been violated by some ATM surcharges. They are unfair to consumers and they appear to bear no relationship to costs incurred by banks to make the ATMs available.
Historic mergers, consolidations, and acquisitions have taken place in the financial service industry in recent years. Consumers have less choice, not more. Bank lobby hours have been curtailed. Some banks have reduced the numbers of tellers. Both are forcing consumers to use ATMs.
I remain concerned some big banks are increasing their surcharging rates to in order to pose a competitive threat to the community banks across this nation. A report issued by the United States Public Interest Group in April says 83 percent of big banks are currently imposing surcharges. The report also states that Big banks impose larger surcharges than small banks.
Some large banks are using double ATM fees to squeeze small community banks, thrift, and credit unions out of business by making it prohibitively expensive for the customers of these other institutions to use the big banks' ATM machines. This is not competition. It is an attempt to monopolize the financial services industry.
Community banks, thrift and credit unions have customers who need to have access to large banks' ATM machines. Too many customers now pay twice whenever they use an ATM. A poll done by the Community Bank League of New England revealed that 33 percent of community banking customers are somewhat or very likely to switch to a larger bank with more ATM machines if an additional surcharge is imposed.
Studies released over the past two years by the General Accounting Office have shown that ATM surcharges have increased dramatically in recent years. Last year's GAO study showed that from the end of 1995 to February 1996, there was an estimated 320-percent increase in the number of ATMs that had surcharge fees. In April, another GAO study reported that the average surcharge fee assessed by banks, including ATM's without surcharges, increased again from 69 cents in February 1997 to $1.00 in February 1998.
It is hard to believe at a time when technology is dramatically reducing the costs for so many businesses in so many ways that it is necessary to for banks to increase the costs for a consumer to use an ATM machine.
In Massachusetts, legislation to limit ATM surcharges has recently passed the Massachusetts State Senate by a unanimous vote and is currently being considered by the Massachusetts House of Representatives.
It is my hope that the United States Senate will follow examples of Massachusetts and other states to enact legislation to ban ATM surcharges this year.
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