ST. PAUL, Minn. - If the saying "there's power in numbers" is true, then the 20 states and one commonwealth that have filed an amicus brief with the U.S. Supreme Court in the case of Holmes Foster v. Bank One. Utah involving states' authority to regulate ATM transactions, may accomplish what states individually have not yet been able to. State Attorney General Mike Hatch filed the brief April 4 on behalf of: Alaska, Arizona, Arkansas, Colorado, Connecticut, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New York, Nevada, New Mexico, North Dakota, Commonwealth of the Northern Marinana Islands, Oklahoma, Washington, and West Virginia. The appeal involves the Sept. 1999-ruling of the Eighth Circuit Court of Appeals which reversed a lower court's decision that upheld a "cease operation" order by the Iowa Superintendent of Banking against Bank One of Utah deployment of ATMs in Utah. The three-judge panel of the Eighth Circuit Court further directed that the District Court of Order enter a permanent injunction against the superintendent (see related story page 1). "Congress has made clear in the NBA (National Bank Act) its intent that ATMs are not to be subject to state regulation, and thus the provisions of the Iowa EFTA that would prevent or significantly interfere with Bank One's placement and operation of its ATMs must be held to be preempted," the Eighth Circuit stated in its ruling. In his amicus brief, Hatch offered two reasons why the U.S. Supreme Court's review of the petition is necessary: first, the Eighth Circuit's decision "contradicts the intent expressly stated in the federal Electronic Fund Transfer Act (EFTA) which empowers states to craft stronger ATM consumer protection laws than those contained in the federal law itself." The EFTA is the "sole federal statute that regulates electronic fund transfers, including ATMs," Hatch wrote. "While annulling all State EFT laws would produce the benefit of uniform EFT standards in all 50 States, the committee rejected this approach because it would contravene Congress' longstanding policy of deferring to those States which choose to provide more stringent consumer safeguards," he continued. Second, the Eighth Circuit's ruling denies the tradition of the country's dual banking system which allows both the state and federal governments to regulate national banks, Hatch argues, adding that "under our nation's dual system of banking, this Court (U.S. Supreme Court) has determined that national banks are subject to state law, unless state law conflicts with federal law." He further notes that "the EFTA follows the paradigm of the dual banking system" in the U.S., and that Congress "deferred to the states to use their traditional powers and expertise in creating laws that would address the needs of the individual states, as long as the laws were not inconsistent with the EFTA." The Eighth Circuit's decision not only undermines Congress' intent in the EFTA, it also "creates an imbalance in favor of national banks to the detriment of the state-chartered banks," Hatch says. "The Eighth Circuit's opinion will certainly be used by national banks to essentially claim carte blanche authority to set up ATMs in our communities without regard for any state consumer protection laws." AG Hatch asked the U.S. Supreme Court to review the Eight Circuit's decision "to ensure in this age of rapidly developing electronic commerce, it is important for a level playing field so that the balance is not tilted in favor of national banks which would adversely affect the states' ability to protect consumers." Bob Brammer of the Iowa Attorney General's office said state AG Tom Miller was very pleased with the array of states that signed on to the amicus brief. "This represents significant support of the argument that this is a states' rights issue," said Brammer. He said the states' brief and another filed by the Iowa Credit Union League and state banking groups (see related story page 1) can only help convince the U.S. Supreme Court to hear the case. -
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