In a reversal, Treasury Under Secretary John D. Hawke Jr. said Thursday that the administration will pursue an ambitious plan for financial modernization next year in Congress.

Mr. Hawke had insisted in recent weeks that expanding bank powers would have to wait until narrow legislation designed to merge the bank and thrift charters was enacted.

But he told a group of banking lawyers Thursday, "You can't deal with the thrift charter without coming to grips with the broader elements of financial modernization."

Within four to six weeks, Mr. Hawke said, the Treasury will recommend that banks be allowed to conduct new activities such as securities and insurance underwriting through subsidiaries. He specifically said the Treasury will not require banks to use holding companies.

Speaking at the American Bankers Association's litigation conference, Mr. Hawke said banks can safely offer new services through subsidiaries if insured deposits are not at risk.

"We should prohibit piercing of the corporate veil so federally insured banks can't be held liable for the actions of their affiliates and subsidiaries," he said.

Adequate safeguards will make it possible for a subsidiary to fail without affecting the bank's capital, he said.

The Treasury's approach contrasts sharply with legislation proposed by House Banking Committee Chairman Jim Leach in the last Congress. Under Rep. Leach's proposal, only holding companies regulated by the Federal Reserve could launch subsidiaries for activities that are now off-limits to banks.

National banks that create these subsidiaries without forming a holding company would be regulated by the Comptroller of the Currency rather than the Fed.

Mr. Hawke, who is a former Fed general counsel, said either agency has the ability to quickly spot problems and prevent insurance funds from risk. "If one believes in prompt corrective action, we ought to provide a charter of freedom for banks," he said.

Mr. Hawke said current prohibitions on additional activities are outdated. "The government shouldn't intervene with regulatory burdens except for a demonstrable government interest that can't be protected any other way," he said.

The Treasury has not decided whether banks and commercial firms may own each other.

"We haven't decided how far we will go," Mr. Hawke said. "But there's a growing consensus that the time has come to permit affiliation of banks, insurance companies and investment firms."

Mr. Hawke said Treasury is likely to preserve existing unitary thrift holding companies, nonfinancial firms that own a single thrift. "Unitary thrifts have not had a history of problems," he said. "If anything, they've added strength to the industry."

Mr. Hawke also said mutual thrifts would be allowed to convert to commercial banks without changing their ownership structure. "We would provide a mutual bank charter for any current institution, and maybe for institutions yet unborn," he said.

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