As lawmakers debated overturning the Depression-era law that keeps banks out of the securities business, bankers at a New York conference this week were focused on the nuts and bolts of preparing for new powers.

Much of the discussion at the Bank Administration Institute capital markets conference focused on the wisdom of opening so-called section 20 subsidiaries, which enable a bank to underwrite some kinds of debt on a limited basis.

Participants also fretted over the potential hurdle of melding the disparate cultures of commercial and investment banks and over the prospect of increased regulatory scrutiny.

While some participants said they have been discouraged from seeking section 20 powers by myriad regulatory hurdles and the probability that the rules will change soon, several were convinced of the value of getting a head start in investment banking services.

"It's very important to get started now with section 20 business," said David Meuse, chairman and chief executive officer at Banc One Capital Holdings Corp. "The only way to compete in the middle market is to have section 20 powers."

But in session after session, bankers lamented the section 20 firewalls that kept them from operating full financial services businesses.

Michael G. Capatides, a partner with New York-based Mayer, Brown & Platt, called the firewalls that prevent banks from enhancing the creditworthiness or marketability of an ineligible security "obnoxiously clear."

The worst firewall, he said, restricted bankers from extending credit or paying dividends on section 20 securities.

Bankers hoped that firewalls would fall before long, and that they could expand the range of services they offer to their customer base.

How commercial banks expand into the investment banking businesses will vary according to the size of the bank, said Paul H. Dimmick, a senior managing director at Chemical Securities Inc. Smaller banks are likely to enter the investment banking business through acquisitions of regional brokerage firms, said Mr. Dimmick.

"The guys outside of New York have figured out that attempting a frontal assault on this won't work," said Mr. Dimmick. "Their niche will be in looking more like a regional brokerage house."

Regional banks will go after more of their customer's business, said Mr. Dimmick. In some respects, they must do so to stay in business.

"The trend appears to be clients doing business with a few purveyors," said Mr. Dimmick.

Bankers also discussed the cultural difficulties of bringing together what Mr. Meuse termed the "solution-oriented approach" at the commercial banks with the "transaction-oriented approach" at investment banks.

Banc One has created a position for a generalist in dealing with clients. "You need somebody to look at the full picture for the client," said Mr. Meuse.

The additional costs and expertise needed to establish a section 20 has kept some bankers from doing so.

"Bankers have to figure out whether they want to jump all the regulatory hurdles," said Lewis W. Teel, executive vice president at BankAmerica Corp. "People are still considering whether the problems will be worth it."

Regardless of what change, if any, comes in Glass-Steagall, bankers saw myriad regulators in their future.

"No matter what happens, you have to consider regulators in this business," said Sandra W. Mauney, the vice president and controller at Huntington Bancshares. "You just can't ignore them."

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