Two big trade groups want changes in proposed new regulation of how the government uses the automated clearing house network.

The Independent Bankers Association of America and the National Automated Clearing House Association each answered the call for comment.

The proposal by the Treasury Department's Financial Management Service is meant to bring government automated clearing house payment and collection practices in line with those of the private sector. The federal government and the private sector now operate under different sets of clearing house rules.

Both the IBAA and the clearing house group highlighted some ambiguities in the wording of the Financial Management Service proposal, and both sought clarification on whether certain of the payments group's rules would conflict with those governing federal agencies.

Officials at the trade groups said their comments are directed at ensuring the proposed amendment has the desired effect of simplifying bank participation in the automated clearing house.

"Consistency is the buzzword," said William Nelson, executive vice president with the clearing house group. "It's difficult for banks if you have two sets of rules to abide by."

In the IBAA comment, Kerby Crowell, chairman of the trade group's operations committee, recommended that the Financial Management Service should "specifically cite" those rules that may conflict with federal guidelines because, "without such clarification, it would be difficult to ascertain the extent to which Nacha rules and operating guidelines are applicable."

The payments group sets the rules for the private sector automated clearing house functions, "and the FMS is trying to parallel those," said Viveca Ware, the IBAA's assistant director of payment systems. "The proposal didn't do a good job of laying out exceptions."

Mr. Nelson noted that despite the many differences in public and private sector rules, the dissimilarities "were not major ones."

But, he added, the current proposal does call for some "radical changes" that not many banks are particularly happy about.

One proposed change would affect the way banks would verify identification of government automated clearing house payments to a receiver.

Currently, prior to sending such a payment, the government sends zero- dollar prenotifications over the clearing house network to receiving banks 10 days in advance. Receiving banks use the information to verify valid account numbers.

"Now," said Mr. Nelson, "they also want the bank to check for the name, which is very labor intensive."

Mr. Crowell wrote that the IBAA was "strongly opposed" to the requirement that banks which do not ask for the added identification assume liability in the event of a loss.

"Such a requirement would be extremely onerous for (banks) as it could only be accomplished through manual intervention. Manual intervention would substantially increase transaction costs without providing any commensurate benefit to the (bank)."

The IBAA was also opposed to a provision that would allow the government to reclaim payments six years after "the date of death or legal incapacity" of the party receiving the payment.

The IBAA believed this provision will expose banks to unreasonable liability because delayed reclamation notices could come long after the receiver of the payment has discontinued the bank relationship.

"In the check world, the Financial Management Service must initiate the reclamation process no later than 18 months," Ms. Ware said. "We'd like to see a similar rule for the ACH. I'm at a loss to explain as to why they would need six years."

Financial Management Service officials declined to discuss the proposal. However, officials there indicated that the final rule likely would be set in the second quarter.

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