The chairmen of the House Banking and Commerce committees met Friday to begin hammering out a compromise on financial reform to send to the full House by July 4.

House Speaker J. Dennis Hastert on Thursday urged Banking Chairman Jim Leach and Commerce Chairman Thomas J. Bliley Jr. to work out a deal in time for a vote next week. The two committees have adopted reform bills in the past three months that differ in key areas such as privacy, powers for direct bank subsidiaries, and regulation of bank sales of insurance.

Rep. Hastert did not set a deadline or specify what to include in the deal, sources said, but he told the chairmen he plans to proceed quickly and does not expect disputes over privacy limits to delay the legislation.

Meanwhile, White House Chief of Staff John Podesta and Treasury Secretary Robert E. Rubin reiterated President Clinton's veto threat in a conference call Thursday with top executives from KeyCorp, Chase Manhattan Corp., Morgan Stanley, Dean Witter & Co., and Wells Fargo & Co., as well as the president of the American Bankers Association.

The administration favors the House Banking bill, which would give broader powers to bank subsidiaries and impose community reinvestment requirements on banks mergers with securities or insurance companies.

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