Banks should not have to disclose more information about automated teller machine fees, and states should decide whether to cap ATM surcharges, Federal Reserve Board Governor Lawrence B. Lindsey told lawmakers Thursday.

"We believe that because Regulation E, network operating rules, and laws in a number of states already require fee disclosures, the proposed legislation may be unnecessary," Mr. Lindsey testified before the House Banking Committee's financial institutions subcommittee.

But John M. Traier, New Jersey's banking commissioner, disagreed. "I believe it is important that any solution on regulating fees comes from Congress," he said.

On the second day of hearings on ATM fees, the panel's chairwoman, Rep. Marge Roukema, R-N.J., noted that consumers have a choice and can avoid the fees if they don't like them.

"It seems to me there is a price for the convenience that has to be paid," she said.

But ATM charges have become a hot topic on Capitol Hill. Rep. Charles Schumer, D-N.Y., and Rep. Bernard Sanders, the Vermont independent, have proposed bills, and Senate Banking Committee Chairman Alfonse D'Amato, R- N.Y., was preparing to follow suit.

The controversy was sparked April 1 when new rules from Visa and MasterCard let banks impose an extra transaction charge on ATM users.

The Sanders bill would prohibit surcharges, and the Schumer legislation would require ATMs to tally up and display on the screen the charges levied by the consumer's bank and the transacting bank.

But Mr. Lindsey warned that prohibiting surcharges might stop banks from deploying ATM machines in remote places. The Fed governor also defended the industry's recent performance, saying no bank had violated ATM disclosure rules in the last three years.

Consumer groups represented at the hearing said banks are making customers pay for using ATMs when the machines cut the institutions' expenses.

"Despite cost saving and cutting, they are increasing fees, inventing fees, and making it more difficult to avoid fees," said Janice C. Shields of the Consumer Finance Project.

Mr. Smith writes for the Medill News Service.

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