The San Francisco board of supervisors has tabled-and effectively killed-a popular proposal to ban automated teller machine surcharges.
This issue did not warrant government interference, said Michael Yaki, one of the supervisors who voted last week to ice the proposed ban.
"Most people avoid fees wherever possible," Mr. Yaki said in an interview. "When they do agree to pay the surcharge, they understand that they are paying for the convenience of getting money where they couldn't before."
Mr. Yaki also cited a potential legal fight with the Office of the Comptroller of the Currency as another reason for tabling the proposal. The OCC has said that local and state officials do not have the authority to regulate national banks' fees.
"It is wiser to regulate these banks at a federal level than to have a hodgepodge of interests putting regulation on them," Mr. Yaki said.
Surcharges-the additional fees customers pay when getting cash from machines not owned by their card-issuing banks-have caused controversy at the local, state, and national level, but few pieces of legislation have passed.
The fight in San Francisco may move to another arena. Board President Tom Ammiano, who introduced the surcharge ban proposal, is expected to push for a similarly worded ballot initiative in November. He argued before the vote Wednesday that consumers, especially those with low incomes, need protection.
"The banking community is not the Vatican," he said. "They are certainly deserving of regulation."
Banks in San Francisco argued that the government has no role to play in this matter.
"In a free economy, businesses have the freedom to price goods and services and consumers have the freedom to make a choice," said Harvey Radin, a spokesman for BankAmerica Corp. "Consumers can choose ... free ATM transactions by using ATMs where they bank."
Others said a ban would have prompted banks to be less, not more, customer-friendly.
"Companies will respond to regulation in a way that is economically rational," said University of San Francisco finance professor Richard D. Puntillo. "In this case, banks would have very likely pulled back their services, accomplishing the opposite of what politicians wanted."