St Germain Sees Need for New Consumer Laws: House Banking Chief to Seek Tougher Depositor Protection

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WASHINGTON -- Rep. Fernand J. St Germain, the chairman of the House Banking Committee, said Tuesday he would push Congress and federal regulators to adopt tougher consumer protection measures for bank depositors.

The Rhode Island Democrat made those comments during a press conference held here to unveil a new survey of bank fees done by the Consumer Federation of America in conjunction with other consumer groups. The survey found increases in the average cost of various banking services since its last survey in 1984.

Mr. St Germain vowed that consumer protections -- such as tougher disclosure rules and limits on how long a bank can hold a deposited check before crediting the customer -- would be given "as much consideration and importance" as legislation to expand bank powers. Earlier this month he introduced a bill that would limit the number of days a bank may hold a deposit.

If major banking legislation is passed this year, it is possible that consumer protections will be included. Observers contend that consumer bills might be the "price" the industry may have to pay for expanded powers.

At the press conference, Mr. St Germain also said that federal banking regulators need to do more to provide disclosure of fees and keep those fees at a reasonable level.

"If a bank is charging unreasonable fees and placing burdens on the less affluent, perhaps it can be argued that the institution is not serving the 'convenience and needs' of the community as required by its charter. Such questions should be weighed heavily by federal regulators when they are asked to approve expansions of depository institutions in any direction," the chairman said.

Mr. St Germain also suggested that if banks are so anxious to charge for services, the federal government might consider charging for the services it now provides as a subsidy to banks.

The Consumer Federation of America survey was based on a nationwide study of 73 commercial banks and 69 savings and loan associations in April. …