More Change for the Penny?

Rep. Spencer Bachus of Alabama, the senior Republican on the committee, opposes turning over authority to the mint as well as, according to a statement, allowing "a single company with a few employees to mine the taxpayers' pockets."

"My boss doesn't believe it is giving the powers of Congress away," said Steve Adamske, a spokesman for Rep. Barney Frank (D-Mass.), who is chairman of the committee, explaining his support for the bill.

The Treasury request also triggered a complaint from Rep. Jerry F. Costello (D-Ill.). He suggested that allowing the mint to use less-expensive materials without congressional direction would hurt a company in his district, Olin Brass, of East Alton, Ill., that counts the mint as its top customer.

Two other members introduced a separate bill to order the mint to make pennies out of copper-coated steel.

The makeup of U.S. coins has been changed before -- in 1967, with the transition from silver, and in 1974, because of an earlier worry about demand for the penny.

The country is awash in pennies, Luhrman said, and the Federal Reserve, which is in charge of distributing coins, orders new ones instead of moving around surpluses. The mint said there isn't a surplus.

Before starting his company last year, Luhrman said he checked with the mint to make sure it was not illegal to melt down pennies. He was told it wasn't, and the company operated for about five months before the government ban.

He bought pennies from banks and used special equipment to cull the copper-heavy ones minted before 1982. He estimated that he could process 5 billion coins annually, separating out 1.2 billion copper pennies.

Luhrman planned to ship the post-1982 "worthless" pennies, which are 95 percent zinc, to areas of the country with penny shortages. He estimated he could save the government $5.25 million in the first 90 days of his operation by shuttling his surplus to markets with shortages, instead of having the mint stamp new ones.

The businessman said he had hired 16 people for his operation. He signed contracts with currency-handling companies such as Brink's Co. in Richmond, and Coinstar in Bellevue, Wash., to get intelligence on the location of penny surpluses and deficits. And he hired a trucking service to ship the pennies.

Luhrman insists he can do the government and taxpayers a service while he makes a pretty penny.

"During the time they work on figuring out the composition of a new coin, let us do what we can do to reduce the number they have to mint at this price," he said. "Every penny being made is wasting money -- a lot of money."

Cindy Skrzycki is a regulatory columnist for Bloomberg News. She can be reached atcskrzycki@bloomberg.net.