If a regulation hall of fame were ever built, the recently departed know-your-customer proposal would undoubtedly be crowned "Most Hated."
More than 254,000 bitter letters rained down on the Federal Deposit Insurance Corp. during the four-month comment period, which ended in March, on the plan to fight money laundering. That's about 251,000 comments more than the agency had ever received on a proposed rule.
But know-your-customer did have a few fans-72, to be precise. A review of their letters to the FDIC reveals reasoning both clear and cloudy.
"As much as I don't like the government sneaking around, if this would catch the jerks that don't pay taxes ... and (consequently) lower my taxes, then I'm all for it," Gary Lingenfelter of Iowa wrote.
"Sounds O.K. to me," said Della Summers of Michigan. "I get Social Security only. If I win the lottery, I'll let you know."
"There is a hidden benefit," said one of several supporters who did not provide a name or address. "If a criminal act is committed, you have proof that you were in the bank making financial transactions at the time of the alleged criminal offense, so there is no way you could have done it."
Much of the overwhelming opposition to the know-your-customer proposal stemmed from fears that it would make banks "spy" on their customers. Average citizens recoiled at the idea of banks scrutinizing their bonus checks or birthday gifts, and they reacted viscerally to Orwellian scenarios sketched by such groups as the Libertarian Party and the American Civil Liberties Union.
But many of the proposal's 72 supporters just didn't buy the privacy argument. Some called it fearmongering, while others said it was eclipsed by the need to wage war on drugs and other crime.
"I think people are unnecessarily paranoid about governmental monitoring," Jennifer Zilin wrote. "The bank might file a report ... but that does not mean the government is subsequently going to hunt you down and arrest you."
"Our society has an established history of requiring its citizens to relinquish their privacy in exchange for added protection against criminal activity," Candice L. Reed of Tennessee argued. She cited airport passenger searches and workplace drug testing as examples. "I am willing to surrender a minute portion of my privacy for the good of the cause."
"Please don't let the Libertarians and their ilk stop you," Mike Bolind wrote. "Let's get the legitimate banking community involved in doing the right thing."
"Conservatives yell 'privacy' when it is the same privacy that protects the criminals as well. Why should we give them an edge when they make more money than we can in a lifetime?" Dean Palladino asked.
Other supporters suggested the proposal's foes were crying "privacy" in order to conceal their own tax evasion or drug trafficking.
"People who have something to hide are going to scream the loudest," Forrest W. Smith wrote.
Said Frank Thompson, "Opposition to this passage is just what the drug dealers want."
"Pirates always needed sites to hide their plunder," Jack H. Peterson of Florida wrote.
"Implement the know-your-customer regs," said Ray E. Porter 3d. "Investigate those opposed."
Banks did not escape unscathed from the criticism.
"I believe that at least some of the banks which object do so because ... some of their major revenue sources are suspect," Richard Snyder of Colorado wrote.
"The know-your-customer concept is similar to a neighborhood watch program," said Steve Enlow. "It is a shame that (banks) are not willing to accept some inconvenience to promote law enforcement. ... Banks are very profitable."
Despite opposition from bank trade groups, the know-your-customer proposal actually drew support from four current or former bankers.
"I believe that the proposed amendments will make the banking industry a more safe and sound profession for all involved," said Jennie Brewer of Peoples Bank, Waynesboro, Tenn. "Although Peoples Bank is located in a small community and our asset size is $57 million, we are not immune to the problems that plague urban areas."
"As a retired banker with 37 years of dealing with people trying to hide income and assets from the IRS, I feel your proposed new regulations are in order," Earl King wrote. "Any way you can catch tax cheaters is O.K. with me."
Even with 254,000 comments streaming in, the FDIC was determined to read each one. Naturally, the agency's bleary-eyed staff was not always attuned to subtleties, and at least two negative letters were mistakenly identified as supportive.
In one, the editor of Caribbean Property List thanked the FDIC for boosting his business. "Many (U.S. subscribers) plan to expatriate," J. Ritter of Florida wrote. "When I ask why, some of them mention your new regulation. Keep up the good work."
Scott Meredith, a Microsoft employee in Washington State, encouraged the FDIC not to be swayed by the wave of negative letters. "Don't let those little people push your organization around. You know what's best," he wrote. "Go for it, and I'll see you in the place where there is no darkness"-a reference to Room 101, the torture chamber, in George Orwell's "1984."