Insiders: Treasury's EBT Chief Finds It's Not Lonely at the Top

Donald V. Hammond at the Treasury Department has been unable to escape special interest groups.

Banking and consumer lobbyists have besieged him since he was tapped last fall to implement the congressional mandate that all federal benefits be delivered electronically by 1999.

Mr. Hammond's popularity may wane, though, within the next few weeks, when the agency is expected to propose its rules.

"We can't give everybody everything they want," Mr. Hammond said, but "we do think we will come up with a regulation that balances all their concerns."

Financial institutions want government subsidies or the right to charge fees to cover the cost of setting up accounts for people without them. Money transmitters want a crack at the business, too.

At the same time, Senate Banking Committee Chairman Alfonse M. D'Amato and consumer groups have pressured Treasury to protect the poor and elderly from being gouged by institutions.

Interviewed recently in his temporary office at the nearly vacant Interstate Commerce Commission building, Mr. Hammond showed no signsof fatigue. The 14-year Treasury veteran said he has thrived on the rare combination of social and technical policy issues that EBT '99 has stirred.

John D. Hawke Jr., under secretary for domestic finance, gave his top lieutenant on the issue high marks.

"He has approached the issues from an ecumenical point of view," Mr. Hawke said. "He has listened to everybody."

Lobbyists also compliment Mr. Hammond.

"He and other Treasury folks have been open to listening to our concerns," said Margot F. Saunders, managing attorney for the National Consumer Law Center. "As to whether or not they respond to them, we will see."

"He has a very diplomatic way of getting people to talk, and (of) listening," said Marcia Z. Sullivan, government relations director of the Consumer Bankers Association. Mr. Hammond heard the concerns of a dozen CBA members in March.

Bernard B. Fulton, legislative representative for the Association of Community Organizations for Reform Now, said he would not want to play poker with the inscrutable Mr. Hammond.

"He has been fairly opaque," Mr. Fulton said. "He does not give us any hints to what the conclusions will be. It is frustrating."

A 1996 law requires the federal government to switch to electronic payment for everything but tax refunds. Treasury makes the lion's share of the one billion Social Security, veterans, and other federal payments each year.

More than 50% of Treasury's payments are already made electronically, and the agency expects to save $100 million annually over five years after converting the rest by Jan. 1, 1999.

"Direct deposit is just a better way for the vast majority of people to receive their money," Mr. Hammond said, repeating Treasury's mantra. "It's safer, it's more convenient."

But the agency faces three major policy obstacles.

The thorniest is how to get benefits payments to the 10 million recipients who lack bank accounts. Under the law, Treasury must create accounts for those who refuse to open them. Most likely, it will contract with federally regulated financial institutions to serve those people.

By law Treasury must make sure these accounts are offered "at a reasonable cost," but Mr. Hammond said the upcoming proposal would not set account fees nor the number of free trips permitted to automated teller machines. Neither will it say whether contracts will be with national, regional, or statewide institutions. The agency will seek public comment on these issues and let competitive bidding set pricing.

Treasury has to define which recipients, such as those who live far from a bank, will be eligible for waivers. And it also must determine whether federally regulated institutions will be able to subcontract with nonbanks to offer accounts, Mr. Hammond said.

Mr. Hammond, 42, has other duties as deputy fiscal assistant secretary at Treasury. He oversees policy for the Treasury's financial management service and bureau of public debt.

From 1987 to 1996, he was assistant director of government securities regulation at Treasury. In the early 1980s, he worked on the Treasury Department's bailout of Chrysler Corp. He has also been a consultant to thrifts and a corporate financial analyst.

A native of Northbrook, Ill., and an avid Chicago Cubs fan, he and his wife Amy live in Falls Church, Va., with their two young children.

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