Small Banks May Set Up

Surcharge-Free Network For ATMs

HARTFORD, Conn. (AP) — The state’s small banks are considering following Massachusetts’ lead and forming a network that would not charge non-customers who use their automated teller machines.

The Connecticut Supreme Court this month threw out a ban on the fees, usually $1 to $2, charged when a person uses an ATM owned by a bank where he or she does not have an account.

Attorney General Richard Blumenthal has said he will push the Legislature to pass a law banning the fees, but some banking leaders doubt such a bill would survive the opposition which defeated it last year.

“I don’t see a huge change in that unless there is a big groundswell from the public,” said Fred Stroiney, president of Windsor Locks Savings & Loan.

Stroiney said community banks have few other options. In Massachusetts, small banks set up the SUM network, where customers were not assessed a surcharge for using other member banks’ ATMs.

The network has grown to include 250 banks and about a third of the Bay State’s ATMs, according to the Boston-based New England League of Community Banks.

“It has been discussed in the past, but we are going to have to look very hard at what is the best way to protect our customers,” said Lawrence McGoldrick, president of Castle Bank & Trust in Meriden.

Fleet Bank spokesman Jim Schepker said the SUM network is “a perfect example” of competition and the marketplace at work, giving customers a choice between competing banks and ATM networks.

Fleet fought the state banking commissioner’s ruling that a 1975 law on bank fees prohibited banks from levying the surcharges.

The high court ruled 5-2 last week that the law did not apply to ATMs, which did not exist when the legislation was passed.

Fleet and BankBoston, which merged in October, will charge non-customers using any of their nearly 520 ATMs in the state a $1 fee starting Jan. 3.

Blumenthal said the Supreme Court ruling will hinder competition among banks and narrow consumer choice.

“Bigger banks tend to have an unfair position because they can tell consumers, as Fleet did during the few weeks that it imposed this fee, ‘If you bank here, you won’t have to pay this fee,’” Blumenthal said.

That tends to drive customers away from the current banks to larger institutions with bigger ATM networks, he said.

Last year, a ban on ATM surcharges for non-customers passed the House of Representatives 125-20, but state Sen. Brian McDermott, the co-chairman of the Banks Committee, blocked a Senate vote on the bill.

McDermott, D-Wallingford, said does not intend to change his position on the issue.

“Obviously, this a risky political decision, but I feel like I am on the right side. Government should not get into price-fixing,” he said.