Capital Briefs: Banc One Cannot Put ATMs in Iowa Sears

A federal judge in Des Moines has ruled that Banc One Corp. may not operate ATMs in Sears, Roebuck and Co. department stores in Iowa.

U.S. District Judge Ronald E. Longstaff refused to overturn an order by state regulators requiring the bank to close its ATMs in Sears and barring it from installing new machines.

Iowa banking regulators charged that Banc One's ATMs were in violation of several state laws, including a requirement that makes it difficult for out-of-state banks to operate ATMs in Iowa.

Banc One challenged the state restrictions, arguing that the National Bank Act, which supersedes state laws, empowers it to install ATMs anywhere in the country. It also said the commerce clause in the Constitution prevents states from discriminating against out-of-state institutions.

The judge, however, rejected the arguments. He ruled that the National Bank Act does not bar states from regulating ATMs. He also said the commerce clause is not violated because Iowa lets Banc One open ATMs if it establishes an office in the state, permits anyone to use the machine, and is headquartered in a state that allows Iowa banks to open ATMs there.

"Absent a strong showing that the Iowa ATM system is contrary to federal statutory law or the Constitution, the court will not disrupt the system because such a disruption would adversely affect the public interest," the judge wrote in the opinion, which was issued July 24.

A Banc One spokesman did not return calls for comment.

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