Senate Must Act to End Bank Discontinuance

With Labor Day behind us, Congress will soon be returning to Washington to finish its legislative business before adjourning until after the Presidential election. A host of controversial issues will await them, not the least of which is the continuing struggle to correct course from the nation’s unprecedented financial crisis.

One issue that probably is under most policymakers’ radar screen is the continuing national phenomenon of bank discontinuance. This is the practice of banks terminating MSBs as customers because of the ambiguity from federal regulators as to how banks should handle such accounts. Without access to the banks MSBs will no longer be able to operate, threatening access to basic financial services to millions of consumers in the United States, not to mentions millions more overseas that depend on remittances from the U.S.

However, a solution is at hand. The MSB Coalition, a national group representing a wide array of money service businesses with operations across the country, worked with a number of trade organizations representing different elements of the financial services industry to develop a compromise that everyone can live with.

H.R. 4049, the Money Services Business Act of 2007, would relieve banks from being the "defacto regulators" of MSBs for compliance with federal laws such as the USA PATRIOT Act and Bank Secrecy Act. The bill is an important step in ongoing efforts to address the problem of bank discontinuance once and for all. It passed the House by unanimous voice vote on July 22nd and is now pending in the Senate.

It is critical that this legislation be fast-tracked for immediate consideration and passage by the Senate in a manner similar to the one adopted in the House. Once signed into law, this bill will help ensure the continued access to basic financial services for millions of Americans who rely upon MSBs to help address their basic financial needs. The legislation is in the best interests of consumers, industry and regulators. It truly is a win-win-win for everyone.