One of the great sea-changes in bank regulation over the past decade has been the piecemeal transformation of the Glass-Steagall Act's "walls" between banking and securities into something more akin to mosquito netting.

Step by step, regulators and the courts have allowed banking companies to become full service brokers, discount brokers, purveyors of insurance and marketers of their own mutual funds.

Yet while a great hullabaloo has been raised over many of these developments, relatively little energy has been put into measuring their effect.

More fundamentally, to what extent are bankers taking advantage of their newfound freedoms?

The answer, apparently, is a great deal, judging by a massive study undertaken by American Brokerage Consultants Inc., of St. Petersburg, Fla., in cooperation with the American Banker.

This special section is based on preliminary findings from the study. The data stemmed from, questionnaires sent out in March to all 8,769 banks, thrifts and credit unions in the country with more than $50 million of assets. Nearly nine out of 10 responded.

The project, which was funded in part by Bisys Corp. and Fidelity Investments, sought more detailed information about bank investment sales than had ever before been gathered.

The overarching conclusion: banks are into investment products big-time.

For example, 71% of the surveyed institutions with more than $1 billion of assets said they are selling mutual funds, annuities or other retail investments.

Fifty-eight percent of those institutions with $250 million to one billion of assets are also in this business, along with 42% of the smaller institutions.

Prospects for more banks getting into the business are strong. Two-thirds of the banks that don't now sell investment products plan to do so eventually, with many launches foreseen by the end of next year.

"There's some enormous potential remaining in the banking industry for [growth in] investments products services," said Richard A. Ayotte, American Brokerage's managing partner.

What, exactly, is driving banks into this field? The answer depends on the size of institution. Those with more than $1 billion of assets cited fee income as their No. 1 motivator. This appears to have started something of a domino effect.

The most important rationale cited by smaller banks was to "stay competitive with other banks."

Interestingly, fears that investment sales by banks would bleed off deposits seem to have faded. In fact, an opposite view has taken hold.

Both small and large banks said. one reason they were selling investments was to keep from losing business to other. investment firms.

"Bank have come to realize that if they don't sell these products, a competitor will," Mr. Ayotte said.

As to the future, banks are optimistic, though not without some big caveats. Specifically, 44% of the respondents predicted that their investment sales will continue to grow - as long as markets remain healthy.

But more than a quarter said sales will decline if markets go south. Only one out of 10 were willing to say, without qualification, that their investment sales programs were here to stay.

Other findings in the study are examined in other stories elsewhere in the section.

Topics range from a look at why some banks have full-service and discount brokers to why others avoid the investments business.

Also, for all the hot talk about a boom in the 401(k) plans, relatively few banks are eager to get into the business.

The survey also shows who bankers' favorite mutual fund companies are, and sheds light on their feelings about regulation.

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