SENATORS CONDEMN NEW RULE FOR BANKS

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

By an 88-0 vote, senators supported legislation directing bank
regulators to drop the proposed rules. The measure lacks force of law
because Senate Democrats blocked a binding vote on its adoption.

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

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

"If you ever wondered whatever happened to the people in the former
Soviet Union who used to run things there and now are permanently out
of work, the answer is they're all in the Clinton administration, and
they're running the banking authorities of this country," said Gramm,
a co-sponsor of the legislation.

In the House, the Banking Committee adopted an amendment to a big
financial services bill Thursday that would kill the proposed banking
rules, which are known as "Know Your Customer."

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

At least one regulator agrees. The comptroller of the currency, John
D. Hawke Jr., who oversees nationally chartered banks, told a House
subcommittee hearing Thursday 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judgment that the proposal should be promptly withdrawn," Hawke said.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 that they were reconsidering the proposed rules, which
have been denounced in a flood of angry e-mail messages since a public
comment period began in December. The FDIC has received more than
170,000 e-mails and letters during the 90-day period, which closes
Monday.

Other agencies involved are the Federal Reserve and the Office of
Thrift Supervision.

The nation's bankers recently joined the chorus of people and groups
urging that the proposals be scrapped, warning they could make
Americans lose confidence in the banking system and government.

The proposal is designed to combat money-laundering techniques used by
drug traffickers and other criminals to hide illegal profits. An
estimated $30 billion was hidden through laundering in this country
last year.