Banks Launch ATM Counter Attack

By Teresa Rochester

The state's two largest banks launched a surprise counter attack Wednesday in the ongoing war over ATM surcharges, leaving Santa Monica customers caught in the crossfire and in the glare of national media attention.

Bank of America and Wells Fargo announced that only their customers can use their Santa Monica ATMs when a controversial city ordinance prohibiting banks from levying fees on non-customers goes into effect Thursday. The two banks operate a total off 33 ATMs in the city.

The counter offensive comes just days before a San Francisco judge is scheduled to hear on Nov. 15 a lawsuit filed by California banks against Santa Monica and San Francisco, where voters passed an identical measure earlier this month.

"We feel that national banks are regulated by federal law and cannot be regulated by municipalities," said Kathleen Shelkret, a spokeswoman for Wells Fargo. "In our view we had to respond to the ordinance at some point, and this is what we chose."

"If you order a cup of coffee and pay $1.50 you're not just paying for the coffee," Bank of America spokesman Cary Walker said. "You're paying for the cup, the sugar, milk and the service. Now you're paying a little extra over that. That's profit. And that's called business. Show me a business that doesn't do business that way, and I'll show you a failing business."

Proponents of Santa Monica's trailblazing ATM ordinance - which was passed last month - charged that the banks were trying to turn customers against the city and deflate a nationwide movement that has governments from Los Angeles to New York drafting similar measures.

"We think this is like 'The Empire Strikes Back,'" said Jon Golinger of California Public Interest Research Group, a consumer watchdog group. "These two big banks are losing the battle over the ATM fees, and they are threatening Santa Monica and cities across the country."

"The arrogance of power that allowed the big banks to double-charge people to access their money now has led them to show their true colors and deny services to the very people they claim to help," said Councilman Michael Feinstein, one of the sponsors of the ordinance.

Customers who visited some Santa Monica ATMs on Wednesday found themselves under the pushy eye of news camera crews and roving reporters, who had been told the ban would go into effect Wednesday. The crews waited in vain for the failed transactions that never materialized.

Despite being unaffected, some customers of the Wells Fargo branch on Fourth Street and Santa Monica Boulevard expressed opposition to their bank's strategy.

"I'm a customer, and I'm closing my account," said Chris, a disgruntled ATM user who declined to give his last name. "This is b.s. I'll open an account at a credit union."

Another Wells Fargo customer, Katie McConnell, said she was disappointed with the bank's stance. "Why fight back?" she said, in reference to the bank's strategy. "Let people use (the ATMs) as a sign of good will."

But other customers were more sympathetic.

"If it was nationwide, it would be a different story," said David Klaus. "So I see their point."

Smaller banks, as well as Washington Mutual, have not followed the bigger banks' lead. Washington Mutual is in the process of reprogramming their five Santa Monica ATMs to comply with the ban.

"We will comply with the city ordinance until or unless the courts intervene and prohibit cities from allowing the surcharge ban," Washington Mutual spokesman Adrian Rodriguez said, adding that despite the bank's decision to comply, they do not support the surcharge ban.

"We also believe that this is not in the best interest of consumers overall," Rodriguez said. " We thinks this sets a bad precedent for the community, and it could be counter productive for the businesses in the community."

Councilman Paul Rosenstein, who voted against the ordinance, said he had expected the ATM ban to backfire, hurting smaller banks at the expense of the bigger ones.

"I think it will lead to greater dominance" for the bigger banks, Rosenstein said. "The reason is if the banks restrict their ATM use to only their customers, more people will just opt for the big banks."

Proponents of the bill - who were anticipating that the banks would await the big showdown in court on Monday -- questioned the timing of the counter attack.

"Santa Monica deliberately and mindfully chose not to enforce the ordinance until the hearing the 15th," said Councilman Kevin McKeown. "This preemptive bullying of consumers by the big banks is surprising only because it is so predictable."

But bank officials countered that the city had failed to notify them that enforcement would be delayed.

"It's news to me," said Bank of America's Walker.

Bank of America has 6,500 ATMs across the country, 21 of which are located in Santa Monica. Walker said that 20 percent of the those who use Bank of America ATM's in Santa Monica do not have accounts at the bank.

Non-customers account for 10 percent of Wells Fargo ATM users, according to bank spokesperson Kathleen Shelkret, who added that Wells Fargo has 12 ATMs in the city.

The city of Santa Monica filed its brief in support of the ordinance in San Francisco Federal court yesterday. Adam Radinsky, who is in charge of consumer affairs for Santa Monica's City Attorney's Office, said the banks' move to limit service is a tactic to bully consumers. He said his office is looking at possible legal ramifications of the action.