When the bank regulators finished their labors on the new Community Reinvestment Act rules, President Clinton pronounced their work good and urged Congress to leave it alone.

While the President's comments were mild, other administration officials have been more blunt in warning the industry and its congressional supporters to stay away from CRA legislation.

"We mean it," said a steely-voiced Richard S. Carnell, assistant Treasury secretary for financial institutions. Mr. Carnell vowed that the administration would fight any effort to change the law.

Still, bankers have no intention of backing down, and the odds are better than even that the Republican Congress will favor the industry's position over that of the Democratic administration.

"We're going ahead with it," said one senior Republican House aide, who scoffed at the administration's warnings.

CRA relief is most likely to be included in the regulatory relief legislation that is gathering steam on Capitol Hill. The Senate Banking Committee begins hearings next week, and the House Banking subcommittee on financial institutions will start on May 18. The House panel could vote out a bill as early as June 8.

The approach likely to win the broadest backing from the banking industry would create a "safe harbor" for institutions with high CRA marks. A safe harbor would protect against community group protests that can hold up mergers for months on end.

"There should be some kind of reward for good ratings," said Joe Belew, president of the Consumer Bankers Association.

The Independent Bankers Association of America, which represents community banks, wants to go a step further and will seek legislation flatly exempting small institutions from the law.

"There are branches of NationsBank that will never see a CRA examiner," said Kenneth A. Guenther, the trade group's head. Those branches, he said, are equivalent to the small banks he represents, each of which will be subject to some degree of compliance with the new regulation.

Mr. Guenther's pointed reference to NationsBank underscores the one problem the industry is likely to have in the battle over CRA. NationsBank and a handful of other large institutions plan to announce today that they side with the President.

It may be that those institutions are simply showing their appreciation for last year's effort on interstate branching. But whatever their motives, any divisions within the industry make legislation that much harder.

The administration is warning that bankers risk losing a great deal if they seek additional relief on the CRA front. In a speech to the Independent Bankers, Deputy Treasury Secretary Frank Newman warned that the entire regulatory relief effort could be jeopardized if the industry pushes on CRA, according to Mr. Guenther.

That might seem a bit extreme, but President Clinton cares deeply about community reinvestment.

His most cherished banking program, the community development banking bill, has already been reduced to rubble by the Republican Congress, and the President is not likely to stand by while Congress tampers with the new CRA rules, his second major banking initiative.

Still, it's hard to remember the last time a banking bill was vetoed. And, short of a veto, President Clinton has precious little influence over the Republican Congress.

GOP lawmakers are serious about regulatory relief. If the banking industry gets serious about CRA, the odds are in favor of legislation.

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