Banks face a blistering fight this year with Senate Banking Committee Chairman Alfonse M. D'Amato over his push to ban ATM surcharges.

"On 99% of issues I agree with Sen. D'Amato wholeheartedly. But on this, the industry will end up at war," said Annie Hall, a lobbyist for Columbus, Ohio-based Banc One Corp.

Many in the industry and on Capitol Hill deride Sen. D'Amato's plan as a blatant ploy to shore up his sagging New York poll numbers. But the three- term Republican said he is deadly serious about prohibiting the fees.

Surcharges are "monopolistic" and "just plain wrong," he says.

Sen. D'Amato is expected to introduce legislation forbidding ATM surcharges early this year and has promised to push for a vote during the next two years.

He introduced a similar bill in July, but held only one hearing on the proposal.

Lined up against the ban are the American Bankers Association and most national banking trade groups and nearly all big banks. Likely to join them: nine of the Senate Banking Committee's 10 Republicans.

Aligned with Sen. D'Amato, meanwhile, are most of the panel's eight Democrats, including Sens. Carol Moseley-Braun of Illinois, Richard Bryan of Nevada, and John Kerry of Massachusetts. Some small banksthat rely on large banks' ATM networks and a handful of state community bank groups may also support the ban.

The New York Republican, who faces reelection in 1998, has been attacking surcharges since April, when Visa and Mastercard announced they would allow banks to charge noncustomers using their Plus and Cirrus ATM networks. With surcharges, ATM users often pay two fees-first to their own banks, then to the machines' owners.

"Eventually we'll get to the point where consumers will have no choices and will be unable to avoid getting charged twice for the same transaction," he said on Jan. 13, following Fleet Financial Group's decision to impose surcharges in New York and three other states.

This isn't the first time Sen. D'Amato has accused banks of charging too much for cards. In 1991, he proposed capping credit card rates. The measure passed overwhelmingly on the Senate floor, only to be rejected later by the House.

To stop another attack, the industry may have to keep up its guard through the end of Sen. D'Amato's reelection campaign in 1998. Lobbyists and congressional staffers alike predicted the tenacious Sen. D'Amato could force a vote.

"If we're not vigilant, we'll wake up one morning and this will be done," said Ms. Hall of Banc One.

Sen. D'Amato has little chance of passing the measure as a stand-alone bill; nearly all Banking Committee Republicans are expected to oppose the ban. Instead, his chances are better in the full Senate, where he could bring up the measure as an amendment to a larger piece of legislation.

"Most Banking Committee Republicans find this repugnant," said another industry lobbyist. "But most of them don't need one million Democratic votes to get reelected."

To beat back the measure, banks will need strong supporters to sway lawmakers to their side. Likely allies include Banking Committee Republicans Richard Shelby of Alabama, Robert Bennett of Utah, and Lauch Faircloth of North Carolina-all of whom have opposed a prohibition on surcharges.

"We should not tell banks how they should price their services," said a staffer for Sen. Faircloth.

Another likely friend is Sen. Christopher Dodd, D-Conn., one of the committee's few Democrats to oppose the ban.

But even in defeat, Sen. D'Amato can "fail gloriously" and still burnish his reputation back home, said another Capitol Hill staffer.

After spending most of the past two years leading the Republican Whitewater investigation of President Clinton, Sen. D'Amato has obliterated support among New York moderates. To regroup, he is apparently trying to paint himself as a pro-consumer, environmentally conscious legislator.

Also, by linking up with Banking Committee Democrats, he can demonstrate his ability to work on a bipartisan basis.

Finally, Sen. D'Amato is likely to use the issue to one-up New York Rep. Charles Schumer, co-sponsor of a House bill requiring disclosure of all surcharges. Sen. D'Amato has criticized the House bill, introduced by Rep. Marge Roukema, R-N.J., for giving surcharges a "seal of approval."

Rep. Schumer, a Democrat who is mulling a run for New York governor, could be a strong challenger to Gov. George Pataki, an ally of Sen. D'Amato.

Congressional staffers expect Sen. D'Amato to introduce his bill soon, with great fanfare and a flurry of press releases.

A round of Banking Committee hearings is likely to follow release of a General Accounting Office report on surcharges later this year. The study, prepared at the senator's request, is to explore the prevalence of surcharges, average fees, and their impact on consumers.

Fleet Financial spokesman James E. Mahoney said banks won't be reluctant to defend surcharges, despite Sen. D'Amato's attacks.

"In order to support our ATM network, we have begun to charge a nominal convenience fee," he said. "We're simply trying to expand convenience for Fleet customers and noncustomers."

Ms. Hall said a fight with Sen. D'Amato is regrettable, but the industry is ready. "No one can get away with calling for support of a free economy and trying to ban surcharges."

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