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Saturday, March 29, 1997 - Page updated at 12:00 AM

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Letters To The Editor

Correction -- ATM Fees -- Who Will Risk Innovation If Government Strips Profit

Correction:

Due to a production error in some editions Tuesday, part of a letter from Bill Muse was deleted and replaced with a portion of another letter on the same subject but with an opposing viewpoint. Mr. Muse's original letter is reprinted below.

ATM fees Who will risk innovation if government strips profit?

David Adams' op-ed piece, "ATM surcharge scheme: a bonanza for big banks" (March 20) was typical of the pernicious nonsense that masquerades as consumer protection. He thinks it's wrong that some banks charge $1.50 to use their ATMs (automated teller machines), and he supports state Senate Bill 5813 which would temporarily prohibit such charges, supposedly to allow little banks and credit unions to build their own networks of ATMs, all under the banner of consumer protection.

First, I think it's damn-near miraculous that most grocery stores and many street corners have machines that dispense money 24 hours a day in a matter of seconds to anyone with a checking account or credit card. A buck and a half seems a bargain to me.

Adams says that in small towns, there's usually no free ATM, so consumers there have no choice but to pay a big bank's fee. Nonsense. They can do whatever they did before the ATM came to town. ATMs replaced nothing; they merely gave consumers yet another option. The fact that ATMs are such big money makers is proof that lots of people prefer paying the fee to whatever they did before this choice was offered.

Adams says stopping the fees for eight months will give small banks a chance to build their own networks. Huh? How is making big banks' ATMs free going to make small banks' ATMs more appealing? And how exactly are big banks "picking off (the small banks') members and customers" by"gouging" them?A free market is the fairest thing there is; everybody votes several times a day. Businesses are free to innovate and set their asking prices, and consumers are free to trade or not.

Adams says that "86 cents out of every dollar paid for ATM fees is pure profit." If true (did he figure in the up-front capital costs these banks laid out?), that's plenty of incentive for others to offer similar services for a smaller profit. That's how it's done in America, by competing, by doing it a little smarter than the other guy, by giving consumers another choice, a better product, or a lower price, not by getting some politician to pass a law that cripples your competitors or gives you a break. Who is going to risk investing in the next innovation if the ability to gather the fruits of your effort and risk can be stripped away by capricious politicians? Government meddling is the only thing that actually limits the choices of consumers, and that's the only thing we really need protection from. Bill Muse Seattle

Copyright (c) 1997 Seattle Times Company, All Rights Reserved.

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