|FOR IMMEDIATE RELEASE:||CONTACT: CHRISTI HARLAN|
|Friday, March 5, 1999||202-224-0894|
'KNOW YOUR CUSTOMER' RULES BLOCKED IN UNANIMOUS SENATE VOTE ON AMENDMENT OFFERED BY GRAMM, BANKING COMMITTEE MEMBERS
The Senate voted unanimously today to approve a measure introduced by Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, to block the so-called "Know Your Customer" rule that would require financial institutions to invade the privacy and sanctity of financial activities of law-abiding citizens.
"Our job on the Banking Committee is to stop this kind of thing from happening," Gramm said on the Senate floor, where he was joined by committee members Sen. Wayne Allard of Colorado and Rick Santorum of Pennsylvania.
"This rule would allow regulators to look at the bank account of every single American — who has an account large or small in any thrift or any bank in America — to determine the customer's source of funds in bank transactions, to determine the particular customer's normal and expected financial transactions, to monitor accounts and activities of transactions that are inconsistent with the normal and expected transactions and to report transactions of customers that are determined to be suspicious to the regulatory authorities," Gramm said.
"If you ever wondered whatever happened to the people in the former Soviet Union who used to run things there and now are permanently out of work, the answer is they're all in the Clinton administration, and they're running the banking authorities of this country," Gramm said.
Gramm had asked bank regulators to withdraw the proposed rule in a Feb. 10 letter, co-signed by Banking Committee member Sen. Bob Bennett of Utah. Gramm said he was dissatisfied with the regulators' response, and he sought a vote Friday on a bill that would block the regulations.
Senate Democrats blocked a vote on the bill, so Gramm offered an amendment to the education flexibility bill now under consideration by the Senate. A motion to table Gramm's amendment was defeated, 88-0, and the prohibition against the "Know Your Customer" rule will be part of the education bill.
"I don't doubt that somebody had a good intention," Gramm said. "The objective here is to look at money laundering.
"But the problem is that this is such a broad reaching regulation that it infringes on our constitutional rights," he said. "Can you imagine having a rule in place in America so that if your mama doubles her contribution she makes on Sunday to the church, her banker looks at it to see if it's out of the ordinary?"