SENATORS JOIN OUTCRY TO HALT NEW BANK RULES

WASHINGTON -- The Senate, joining a torrent of criticism from people
worried about privacy, told the government yesterday to withdraw
proposed anti-money laundering rules that would track bank customers'
habits.

By an 88-0 vote, the Senate expressed support for a measure directing
bank regulators to drop the proposed rules, called "Know Your
Customer." Senate Democrats blocked a vote on actual adoption of the
measure, sponsored by Sens. Phil Gramm, R-Texas, and Wayne Allard,
R-Colo., so it lacks the force of law.

"This is such a broad-reaching regulation that it infringes on our
constitutional rights," Gramm, the chairman of the Senate Banking
Committee, said on the Senate floor. He maintained that the rules
would violate the Fourth Amendment prohibition against unreasonable
search and seizure.

In the House, the Banking Committee on Thursday adopted an amendment
to a big financial services bill that would kill the proposed banking
rules.

Privacy advocates, conservative groups, ordinary people and the
nation's bankers have complained that the rules would transform every
bank teller into a spy for Big Brother.

At least one federal regulator agrees with the Senate. U.S.
Comptroller of the Currency John Hawke Jr., who oversees nationally
chartered banks, told a House subcommittee hearing Thursday that the
rules should be scrapped.

"It is my judgment . . . that the proposal should be promptly
withdrawn," Hawke said.

Hawke and Donna Tanoue, head of the Federal Deposit Insurance Corp.,
said recently they were reconsidering the proposed rules, which were
denounced in a flood of angry e-mail starting in December. The FDIC
has received more than 170,000 e-mail messages and letters during the
90-day public comment period, which closes on Monday.

The other agencies involved in the matter are the Federal Reserve and
the Office of Thrift Supervision.

The regulations would require banks to verify their customers'
identities, know where their money comes from and determine their
normal pattern of transactions. Current requirements for banks to
report "suspicious" transactions to law enforcement authorities would
be expanded.

The proposal is designed to combat money-laundering techniques used by
drug traffickers and other criminals to hide illegal profits. Money
laundering is a major concern of law enforcement officials; it reached
an estimated $30 billion in this country last year.