CLINTON SIGNS FINANCIAL REFORM.

Byline: Marcy Gordon Associated Press 

President Clinton signed into law Friday a sweeping measure that knocks down Depression-era barriers and lets banks, investment firms and insurance companies sell one another's products and provide one-stop shopping for financial services.

``This is a day we can celebrate as an American day,'' Clinton said at the signing ceremony in a White House auditorium. The audience of lawmakers and senior government officials included Federal Reserve Chairman Alan Greenspan.

Praising Congress' bipartisan support for the legislation, Clinton said it is a victory for both free markets and consumer protection.

The law will help ``make sure that the 21st-century economy really works for our country,'' the president said. Clinton opposed similar legislation for years but recently dropped his veto threat after changes were made.

Congress passed the law Nov. 5 to open the way for a blossoming of financial ``supermarkets'' that will sell loans, investments and insurance. Proponents pushed the legislation in Congress for two decades, and Wall Street and the banking and insurance industries poured millions of dollars into lobbying for it in the past few years.

At stake is an estimated $350 billion that Americans spend annually on fees and commissions for banking, brokerage and insurance services. Proponents say the legislation will save customers $15 billion a year, offering them greater choice and convenience and spurring competition. Consumer groups and other opponents maintain it will bring higher prices and jeopardize people's financial privacy.

Clinton said he believed the law's privacy protections ``have teeth'' but expressed reservations about whether they go far enough. He directed his economic advisers to study the law and recommend additional legislation next year.

``I want to make sure every family has meaningful choices about how their personal information will be shared within corporate conglomerates,'' Clinton said. ``We cannot allow new opportunities to erode old and fundamental rights.''

The overhaul is one of the few major pieces of bipartisan legislation to emerge this year from the Republican-controlled Congress.

Clinton agreed to the law over warnings from Democratic critics and consumer advocates that it could lead to price-gouging and the erosion of people's privacy by financial conglomerates that become too big and powerful.

Officials in some states already are preparing to challenge the law, using a provision within the measure itself that gives supremacy to state laws that grant consumers greater privacy protections than the federal law does.

The new law ``will mean fewer choices, higher prices and greater risks for the taxpayers'' if the government has to bail out big financial conglomerates that fail, Ralph Nader declared Friday. He said the package contains ``post-Halloween horrors left on consumers' doorsteps.''

In addition, Nader said, ``Personal privacy will be virtually eliminated'' under provisions allowing affiliated businesses of the newly merged companies to share customers' personal financial data as they offer one-stop shopping.

Until a few weeks ago, the Clinton administration itself was threatening to veto the legislation as it assumed forms that raised White House objections. In recent months, the administration objected most sharply regarding the bill's treatment of federal rules that require banks to make loans within minority and low-income neighborhoods where they operate.

Senate Banking Committee Chairman Phil Gramm, R-Texas, a conservative who opposes such rules, last year managed to kill a financial overhaul bill over the issue. The White House insisted that banks be required to have strong records of local lending under the rules as a condition for expansion into other financial activities.

A breakthrough came in the early hours of Oct. 22, when Treasury Secretary Lawrence Summers and other administration officials reached a compromise with key Republican lawmakers after days of negotiations behind closed doors. The White House then lifted its long-standing veto threat.

``It was sweaty, it was tense, but it had momentum,'' Sen. Charles Schumer, D-N.Y., said of the final bargaining session. He and Sen. Christopher Dodd, D-Conn., whose states are home to Wall Street and the banking industry (New York) and the insurance industry (Connecticut), helped broker the agreement.

HIGHLIGHTS OF THE NEW LAW

Key features of the financial wildlife corridor; volunteer; overhaul President Clinton signed into law Friday:

STRUCTURE OF FINANCIAL SERVICES:

Removes Depression-era barriers between banks, securities firms and insurance companies, allowing them to merge and sell one another's products.

Bars companies outside the financial industry from merging with banks, brokerages or insurers.

CONSUMER PRIVACY:

Allows affiliated financial companies to share customers' personal data with each other.

But consumers have the right, by written request, to stop the companies from sharing their data with firms outside the corporate group, such as telemarketers. There are exceptions to that right when, for example, the telemarketer or other outside firm has an agreement with a bank in the group to market the bank's own products.

Requires financial companies to disclose to customers in ``clear and conspicuous terms'' their procedures for protecting personal data.

Makes it a federal crime, punishable by up to five years in prison, to misrepresent oneself to obtain someone's private financial data.

Gives supremacy to state laws that grant consumers greater privacy protections than the federal bill.

ATM SURCHARGES:

Requires banks to disclose ATM surcharges in notices on the automated teller machines and on the computer screens before a transaction is made.

INSURANCE AND SECURITIES SALES BY BANKS:

Requires banks selling insurance and securities to make clear that, unlike bank deposits, those products are not federally insured. Banks also are prohibited from requiring consumers to buy insurance or securities as a condition for getting a loan approved.

COMMUNITY LENDING BY BANKS:

Says that banks wishing to expand into other areas of financial activity must have a satisfactory rating from federal examiners on making loans in low-income and minority areas.

THRIFT CHARTERS:

Bars nonfinancial companies from acquiring or starting a federally insured savings and loan. That means department store chains that have applications pending before federal regulators would be barred from operating thrifts.

- Associated Press

CAPTION(S):

2 Photos, box

Photo: (1 -- color) President Clinton reacts to applause by lawmakers after he has signed the Financial Services Modernization act of 1999 on Friday.

Justin Lane/The New York Times

(2) Fed Chairman Alan Greenspan, left, and President Clinton confer after a sweeping measure reshapes the U.S. financial landscape.

Khue Bui/Associated Press

Box: HIGHLIGHTS OF THE NEW LAW (See text)