The Treasury Department asked Friday whether it should bar banks, thrifts, and credit unions from subcontracting out electronic benefit redemption services to check cashers, currency dealers, and money transmitters.

In a notice of proposed rulemaking, the Treasury Department sought comment on whether allowing subcontracting would put recipients of government benefits at risk because they would not be covered by consumer protection laws that apply only to banking companies. It also asked whether it should regulate, rather than ban, subcontracting. Comments are due by April 8.

The issue has been a major concern of Paul S. Sarbanes, the ranking minority member of the Senate Banking Committee. It is one reason why the Maryland Democrat blocked a vote last year on John D. Hawke Jr.'s confirmation as comptroller of the currency.

"If the banks feel it's an appropriate line of their business, then they should be allowed to pursue it," said Viveca Y. Ware, director of payment systems for the Independent Bankers Association of America.

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