WASHINGTON -- Rep. Cleo Fields, D-La., has been hearing horror stories fro constituents about checkm cashing outlets since he arrived in Congress last year.

On Thursday, he told the House Baning subcommittee on consumer credit and insurance about one such constituent, a 34-year-old woman who receives a $400 check each month to help care for a son with cerebral palsy.

The woman, he said, pays up to $50 just to cash that check.

"This is absurb," he said. "I could not stand idly by and watch as this monther of four was asked to give up so much of the money she needed in order to care for her son."

Legislation Introduced

What he did was introduce legislation to regulate check cashing outlets and to require banks to cash government checks for noncustomers.

Although his legislation has little chance of being passed this year, supporters are hopeful that Thursday's hearing will keep it alive until next session of Congress.

Access to banking services "is an absolute necessity for consumers to save, invest, obtain credit, and build financial security," said subcommittee chairman Joseph P. Kennedy 2d, D-Mass.

"Yet millions of Americans cannot find affordable checking and deposit services in the communities in which they live," he added.

However, one banker told the panel that the market has begun to respond on its own to the need for such "basic banking services."

Meddling with the Market

"Not only would legislation interfere with the natural response of the marketplace, but it could actually hrt the consumers it is intended to help," said Marie Mann, Community Rerinvestment Act compliance office for Crestar Bank, Washington.

Lelgislation, she said, will inhibit banks from tailoring basic banking accounts to local needs.

"A small bank in a rural community must be permitted the flexibility to tailor its operations and products, inluding its basic banking accounts, to fit the needs of its customers, as should a large institution operating exclusively in an urban environment," she added.

Convenience Factor

Jeffrey Silverman, president of M.S. Management Inc., representing the National Check Cashers Association, told the panel that many of his customers have a relationship with a depository institition but "prefer the convenience of check cashing centers."

"Independent surveys indicate that 60% to 70% of check cashing clients maintain a relationship with a bank," he said.

They use check cashing outlets to get quicker access to their funds, because they are closer to their homes and because they have more flexible hours, he said.

Deepak Bhargave, legislative director of the Association of Consumer Organizations for Reform Now, said that lack of access to financial services has reached "crisis proportions" for many customers.

"Fewer Americans have a checking account with a bank or thrift than at any time in recent years," he said.

"At the same time, there has been a corresponding explosion of check cashing outlets," he added.

In 1988, he noted, the Geneal Accounting Office estimated that nearly one in five American families does not have a bank account.

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