Bankers are worried that consumer protection provisions in the financial services reform bill that the House passed last week would leave them open to discriminatory treatment by state officials and impose new regulatory burdens.

"The general concepts of consumer protections covered in the bill are supportable by us, but we have real problems with some of the details," said Edward L. Yingling, chief lobbyist for the American Bankers Association.

At issue are measures that would fortify current regulations requiring banks to disclose that investment products are not federally insured and to keep traditional banking services physically separate from investment and insurance services.

The bill also would require banks to offer low-cost banking accounts to needy customers.

Consumer activists contend that the legislation would prevent many deceptive sales practices by banks and provide other customer protections. And they vowed to push for more protections.

"Overall, there are some victories, but there are still some setbacks we will be working on," said Mary Griffin, banking counsel for Consumers Union.

The provisions are intended to reduce customer confusion between federally insured bank deposits and uninsured investment products.

Also, customers could seek to recover losses through an administrative settlement process if they believe a bank has misled them.

The consumer provisions were critical to Democratic support for the bill, which the House approved 214 to 213.

The sweeping reform legislation would eliminate the legal barriers separating the banking, insurance, and securities industries. Senate approval of the bill is unlikely this year, though Senate Banking Committee Chairman Alfonse M. D'Amato has promised to hold hearings soon.

Many of the consumer provisions were included in an amendment sponsored by Rep. John D. Dingell, D-Mich. Among the requirements, federal regulators must review their rules on fee disclosures. Agencies that do not require simple, accurate, and complete disclosures would have to revise regulations.

The Dingell amendment, which passed 407 to 11, also would prohibit banks that are not registered as broker-dealers from charging fees above costs. The ABA complained that would harm trust services.

In a key change sought by consumer groups, the Dingell amendment would let state laws override federal consumer protections provided they offer more safeguards.

Regulators from the three federal banking agencies would jointly decide whether federal protections are stronger.

Still, the amendment would bar states from passing laws that "prevent or significantly interfere" with bank activities.

Consumer groups are urging lawmakers to rein in that section because it is so broadly worded that federal regulators could override state laws on loan and deposit products-not just insurance sales.

"It means the state legislatures ought to pack up their banking committees," said Ed Mierzwinski, a consumer advocate with the nonprofit watchdog U.S. Public Interest Research Group.

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