BANKS' BIG BROTHER/

Feds make private institutions play snitch on public's financial affairs

So this is what the drug war has come to: Nosing into the bank accounts of
law-abiding people, even tracking the transaction histories of depositors
and developing profiles on them, in search of behavior deemed suspicious.

After all, maybe that $15,000 just dumped into a savings account was some
smack peddler's haul. Or maybe it was just your Great Aunt Gladys, at last
heeding your advice, moving her life's savings from a mattress to a more
conventional institution. Oh well, better safe than sorry.

For some years now the banking public has had to face such scrutiny by the
federal government - to the dismay of both depositors and bankers - and the
surveillance is about to take on a new dimension. As many readers learned
from a Saturday Gazette front-page report as well as from recent comments on
these pages, federal agencies that regulate banks are proposing to
consolidate rules dating to 1984 that are meant to weed out criminal
activity.

The Know Your Customer rule, on which the Federal Deposit Insurance Corp.
and three other federal agencies are accepting public comment until March 8,
arguably would be more of a burden to bankers themselves than to depositors,
seeing as the feds already have been getting the information they want on
banking customers. The new rule, which could become law at the regulators'
behest, imposes upon bankers in effect to collate the information

That poses more paperwork for the banking industry and perhaps escalates
banks' involvement as forced government snoops to the level of "drug
enforcement officers and IRS agents," as State Bank & Trust President John
Jackson put it. Whether or not law enforcement authorities will be better
able to hunt down the likes of money laundering, the long-standing rules as
well as the latest proposed embellishment upon it surely jeopardize our
privacy.

Is there a constitutional issue here, involving the Fourth Amendment's
protection against unreasonable search and seizure? Not to Federal Reserve
assistant director Richard Small, who smugly observed that banks are private
entities, and any information customers give them isn't constitutionally
protected. He didn't mention, of course, that the only way to stay open for
business as a bank is by submitting to extensive regulation and passing on
to the regulators whatever information they deem necessary.

The feds protest this is nothing new, just a more cohesive form of standing
law - as if we should have stopped carping and accepted out fate by now.
More disingenuously, the regulators insist this meddling, including the
latest dubious upgrade, helps ensure the soundness of banking.

That, of course, is nonsense. Banks, as competitive businesses vying for
customers in the marketplace, are perfectly capable of looking after their
own good reputations. It's in their interest to do so. They know better than
any government entity what it takes to provide a stable financial climate
for customers.

There's a bigger issue here. Though the government contends this imminent
move, and the current laws it combines, aim to stem a broad array of crime,
Jackson summed up the proposal's more precise intent with his reference to
drug enforcement officers and IRS agents.

If there are two areas of law enforcement that have gotten way out of hand -
when considering the crime they curb vs. the ordinary, law-abiding citizens
they ensnare - it's the drug war and income-tax collection.

However urgent either of those priorities - separate debates in themselves -
each at times has turned the justice system on its head. Neither the
neverending war on drugs nor the infinite search for federal revenue has any
business treating the majority of us like criminals to nab the minority who
are. Whether the proposed new rule winds up affecting very many consumers
isn't the point. Taxes aside, our financial affairs aren't the feds'
business.

Lethal death tax

A proposal made for this president?

Two Republican Colorado lawmakers in Congress are pushing legislation in the
House and Senate to abolish the so-called "death tax" on estates and gifts.
Rep. Scott McInnis introduced a bill to abolish the tax last year but it was
not acted on before Congress adjourned. He will reintroduce the bill this
session. Sen. Ben Nighthorse Campbell introduced a bill last week that would
slowly phase out the federal estate and gift tax by 5 percent each year
until it is eliminated.

McInnis tells the Associated Press he hopes to eliminate federal taxes on
estates and gifts because, in part, families are often forced to sell
family-run farms or businesses in order to meet the estate tax demands.

He also says he expects the legislation to be resisted by the Clinton
administration. That's too bad. Here's a chance for the president to remove
an onerous burden from middle-income Americans; to shore up the family and,
in sparing farms from subdivision and development - to preserve open space.
All were priorities enunciated by President Clinton in his State of the
Union message.