Lawmakers and lobbyists were yesterday urging the White House to freeze the implementation of proposed regulations prohibiting online gambling after the banking industry said the rules were ambiguous and unworkable.
Barney Frank, the Democratic chairman of the House financial services committee, said he was "deeply disappointed" that the Bush administration was moving forward with so-called "midnight rulemaking" that would burden the financial industry at a time of economic crisis and tie the hands of the incoming president, Barack Obama.
The new rules, which were proposed following the 2006 passage of the Unlawful Internet Gambling Enforcement Act, would require financial companies with designated payments systems to have procedures in place to prevent payments being made to illegal gambling businesses. According to the US Treasury, illegal gambling consists of any bet or wager involving the internet that is illegal in the state in which the bet is made.
Banking groups have expressed deep concern over the proposed rules because they would force banks to reconcile conflicting state and federal rules on online gambling. The Financial Services Roundtable, among others, complained that regulations expanded the role of financial institutions into law enforcement agencies.
The US Treasury said yesterday it was working with the Federal Reserve to complete the regulations as directed by Congress.
Mr Frank also sought the intervention of Ben Bernanke, the Fed chairman, who shares the responsibility of implementing the new rules with the White House.
Pointing to the Fed's own criticism of the rules, stated in a hearing last year, Mr Frank said: "I strongly urge you not to burden the new administration with administering a statute which cannot be carried out."
The White House has also come under fire because a former lobbyist who now works in the White House is allegedly playing a key role in pushing for the regulations. In a letter to the White House counsel, Congressman Steve Cohen of Tennessee asked whether Bill Wichterman, who advocated for the anti-gambling law in 2006, had recused himself from involvement in the issue.
