Senate Banking Committee Chairman Phil Gramm of Texas and Sen. Bob Bennett of Utah urged regulators Wednesday to withdraw the know-your-customer proposal.

In a letter to the heads of the four bank and thrift agencies, the two Republicans said the proposed rule, issued in December for public comment, would violate citizens' privacy rights.

"While it is necessary to maintain a reasonable level of vigilance to curb money-laundering and other illicit activities," they wrote, "hardworking Americans do not deserve this invasion of their private lives."

"This was just really, really poorly handled," a Senate Banking spokeswoman said. "Perhaps they could start over with a well thought out process."

The two-paragraph letter came one week after House Banking Committee Chairman Jim Leach urged regulators to revamp the proposal to better protect consumers' privacy and lighten the compliance burden for small banks and thrifts.

Four bills that would block implementation of a know-your-customer have been introduced in the House, but the Senate Banking spokeswoman said Sens. Gramm and Bennett had no intention of sponsoring or supporting similar legislation.

"The regulators can just withdraw this proposal," she said. "There's no need to legislate."

Individual regulators, including Federal Deposit Insurance Corp. Chairwoman Donna A. Tanoue, agree that the proposal needs revising.

But the agencies are not expected to do anything until the comment period closes on March 8, according to officials who attended a meeting Friday of representatives from all four agencies.

"No options were foreclosed on Friday," said Christie A. Sciacca, the FDIC's lead staffer on the issue. But, he added, "the current proposal cannot stand."

Among the options staffers discussed:

Continue with the normal regulatory process and issue a final rule.

Scrap the original proposal and issue a new one for public comment.

Abandon the proposal and instead issue less-binding guidelines or a policy statement.

Drop the proposal and do nothing.

Meanwhile, the pile of letters and e-mails pouring into the regulatory agencies continues to grow. The FDIC has received more than 24,000 comments, virtually all of them opposed.

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