A $33,889 ATM Fee?

Dec 12, 2012

Yesterday, Congress made two good decisions.

Yes, you read that right. Two. With bipartisan support. While they may not have the fiscal cliff debacle sorted out, the Senate tackled a small but significant regulatory change that makes good, practical sense.

Withdrawals from the Legal System

Have you ever noticed that little placard on ATMs that discloses fees? The required signs may not catch your attention, but they have been a target of the frivolous lawsuit community. In many cases, vandals have removed or destroyed the placard, photographed the ATM, and then sued the ATM provider for violating disclosure rules.

For many banks, particularly small community banks and credit unions, the cost of settling is less than fighting these frivolous suits. The L.A. Financial Credit Union was forced to put $33,889 into court-ordered escrow last year for settlements over six of its ATMs. David Morrison of Credit Union Times writes, “These sorts of cases often come in waves and are often sparked by law firms that see ways to obtain fairly easy money from credit unions and community banks that will settle the cases rather than fight them.”

So Congress agreed with common sense and eliminated a signage requirement that serves no useful purpose, and creates huge liability for ATM providers. You might be asking yourself about the fee notice that comes on the screen. Don’t worry—that isn’t going anywhere.

CFPB To Follow Same Rules 

The second bill passed by the Senate yesterday ensures that privileged information shared with the new Consumer Financial Protection Bureau (CFPB) through the supervision process is protected from disclosure to third parties in the same way supervisory information is protected by other banking regulators.

Lenders supervised by the CFPB were concerned that confidential information that companies turn over to the regulator was not being sufficiently protected. Reuters reports that "they feared competitors could obtain the documents through litigation or other means."

Congress did not intend to create a different standard for CFPB, but a small drafting oversight in Dodd-Frank created substantial confusion, and this legislation fixes the problem by requiring the bureau to abide by the same standards that other financial regulators follow.

Building on Progress

Passage of this bill is good news for businesses that are looking for any certainty in a constantly changing regulatory environment. There are bills being considered that could benefit from the same approach.  For example, a bill in the Senate that needs immediate attention would create a clear exemption from government-imposed collateral requirements for “end-users” like manufacturers, agricultural companies, and energy companies that use derivatives to hedge day-to-day business risk.  It may sound like minutiae to the average person, but there are very real consequences to sitting on the sidelines. Without the exemption, these companies could be forced to park billions of dollars in margin accounts that would otherwise go into expanding their businesses and hiring new employees. 

Congress should continue to look for opportunities to make technical corrections—even to laws as politically sensitive as Dodd-Frank—that have broad bipartisan support and just make sense.

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