Miscellaneous provisions include ATM
fees and Wal-Mart's thrift-buying efforts
By Holden Lewis • Bankrate.com

Sick and tired of paying access fees for automated teller machines? The Financial Services Modernization Act is not going to eliminate them. But it does contain a provision that requires owners of ATMs to warn you when you'll have to pay a fee.

The ATM rule is one of a number of catchall provisions in the compromise version of the bill that was given to the House-Senate conference committee.

• ATM operators who impose a fee for nonmembers of the ATM network have to post two notices of the fee. First, there has to be a sign on or near the machine. Second, a notice has to appear onscreen, telling you how much the fee will be. That notification has to come in time for you to back out of the transaction without being charged a fee.

If a vandal removes the sign from the machine, the ATM's owner is not liable.

Wal-Mart is stiff-armed
Wal-Mart and other commercial companies wouldn't be able to buy a thrift. The conference committee closed the so-called "unitary thrift loophole" that allows nonfinancial corporations to buy a savings-and-loan institution.

On June 29, retailing titan Wal-Mart applied to buy a thrift in Oklahoma. Wal-Mart said it planned to open five branches of the savings-and-loan to test their profitability. In essence, Wal-Mart wanted a way for its customers to drop in and buy groceries, hiking boots and birthday cards, then apply for a loan.

Wal-Mart already leases space to banks in some stores, but had it been able to buy a thrift, customers could have banked with a savings-and-loan owned and operated by Wal-Mart.

Others in the clear
The conference committee decided that any company's application to buy a thrift that was received after May 4 would not be approved. Because Wal-Mart's application was made in June, presumably the bill would not allow that application to go forward.

Hundreds of commercial companies already own thrifts, and they will be allowed to keep them, but not to sell them to other commercial enterprises. Corporations that own thrifts include Pulte Corp., Hy-Vee Inc., Prudential and Morgan Stanley Dean Witter.

Pulte is one of the country's largest real-estate developers and house builders. Hy-Vee owns more than 200 food, drug and convenience stores in seven states. Prudential is a large insurance company. Morgan Stanley Dean Witter operates the Discover card and Dean Witter securities brokerage.

• A bank can charge customers in other states the same interest rate that it charges customers in its home state -- even if that rate is higher than allowed in some states' laws.
• Mutual insurance companies -- those in which policyholders own the company -- can "redomesticate" if they choose to transform into stockholder-owned companies.

Another state's laws
A company redomesticates if it switches its charter to another state -- in effect, switching its corporate "citizenship." Some insurance companies might want to redomesticate to take advantage of more favorable state laws.

There was some controversy over this provision because companies could redomesticate to benefit their executives at the expense of policyholders. An unethical company could give policyholders less stock in the company than they deserve.

Glenn S. Daily, a fee-only insurance consultant, has devoted a Web site to the issue.

• Federal regulators will be required to recommend ways to adapt banking regulations to accommodate online banking and lending.
• Federal banking regulators have to use "plain language" in their rules published after Jan. 1, 2000.
• Financial advisers are encouraged to offer services and products in a nondiscriminatory, non-gender-specific manner.
• A federal savings association (a thrift) with the word "Federal" in its name can keep that name if it converts its charter to become a national or state bank.
• Foreign banks that have had branches in the United States since Sept. 29, 1994, can open additional branches, with regulatory approval.
• National banks will be able to underwrite and sell municipal revenue bonds.

-- Posted: Oct. 15, 1999