City officials are expected to move closer today to banning automated teller machine surcharges.

An ordinance prohibiting the fees is expected to be approved today by the finance and labor committee of the San Francisco Board of Supervisors.

Board President Tom Ammiano, who introduced the measure, said it would halt a practice that threatens small banks, thrifts, and credit unions, which say they cannot compete with large banks' ATM networks.

He also said the extra fees levied on noncustomer ATM users are gouging consumers.

"A lot of my constituents have complained to me about how they are getting soaked by the banking industry," Mr. Ammiano said in an interview. "This is going to be a serious fight."

If the proposal is approved today, the committee would recommend that the board consider it next week, Mr. Ammiano said.

If the board approves it, the measure would be sent to Mayor Willie Brown for his signature. He has not made public his stance on the issue.

Though state banking regulators in Connecticut and Iowa have banned surcharges, attempts to adopt similar prohibitions have failed at the federal level and in states such as California.

In Connecticut and Iowa, regulators are facing legal battles. Banking industry representatives said a ban in San Francisco would face a similar legal challenge.

"This will certainly go to court if approved," said John Stafford, a spokesman for the California Bankers Association. Mr. Stafford said that, though the measure is intended to help community banks, a substantial number of the small banks headquartered in San Francisco have formally opposed it.

Eighteen banks, including Pacific Bank and Commercial Bank of San Francisco, argued in a November letter to the board that banning surcharges would amount to a needless government intrusion and "lessen the choices and convenience of consumers."

"This is a misguided foray into the marketplace," Mr. Stafford said. He said the ordinance would unfairly single out banks, thrifts, and credit unions because nonfinancial institutions' ATMs would be exempt from the ban.

If the board rejects the proposal, Mr. Ammiano said, he would push for a ballot initiative that would put the issue before the voters next November.

State Sen. Betty Kirnette, a Democrat from Long Beach, has introduced a bill that would ban surcharges throughout California. Massachusetts, Minnesota, Tennessee, and Wisconsin are among states with similar bills pending.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.