HOUSE PANEL CLEARS BILL TO REVAMP FINANCIAL LAWS.

Byline: Marcy Gordon Associated Press 

With the threat of a presidential veto hanging over it, a House panel Friday approved a reworked measure to overhaul the nation's financial laws. Two competing versions of the legislation are now before the House.

By a 23-2 vote, the House Commerce subcommittee on finance adopted the new bill, which would allow banks, securities firms and insurance companies to get into each other's businesses. The vote sent the measure to the full Commerce Committee.

A competing bill, narrowly approved in June by the House Banking Committee, would let banks merge not only with brokerages, insurers and other financial firms but also with commercial companies. That bill drew the objections of Federal Reserve Chairman Alan Greenspan, Securities and Exchange Commission Chairman Arthur Levitt Jr., and others.

The finance subcommittee, whose areas of responsibility include the securities industry, has a different interest-group constituency from the Banking Committee's.

Now House lawmakers may have to choose between the two versions unless Republican leaders step in to decide the issue. The Senate has not acted on similar legislation this year.

Jake Lewis, a spokesman for consumer advocate Ralph Nader, said neither version contained adequate consumer protections.

The Clinton administration supports the general goal of revamping the nation's financial laws. But it objected to the new measure because it wouldn't allow operating subsidiaries of banks to engage in the same range of financial activities as banks' parent holding companies.

``We cannot support any bill that would . . . discriminate against national banks,'' John Hawke, Treasury undersecretary for domestic finance, wrote in a letter Tuesday to Rep. Michael Oxley, R-Ohio, chairman of the finance subcommittee.

Sounding the alarm during Friday's drafting session, Rep. Rick Lazio, a New York Republican whose Long Island district has both banking and securities interests, warned, ``The administration has threatened to veto the bill because subsidiaries of national banks lack power.''

White House spokesmen had no immediate comment on the matter.

Lazio said the new bill has several ``deficiencies,'' contending that the absence of a banking-commerce mixture ``threatens to stagnate healthy companies.''

Lazio voted for the measure but said he would reassess his position next week when the bill is scheduled to be taken up by the full Commerce Committee.

Voting against it were Reps. Brian Bilbray, R-San Diego, and Elizabeth Furse, D-Ore.

In contrast to Hawke's critical tone, Levitt told Oxley in a letter Thursday that the new bill ``goes a long way toward'' meeting the test of ``responsible and balanced'' legislation.