WASHINGTON -- The House Banking Committee on Friday approved the most sweeping revisions in banking law in almost 60 years, but the fate of the legislation now rests in the hands of House Speaker Thomas S. Foley.

The legislation, which would allow investment and commercial banks to affiliate with each other for the first time since the Glass-Steagall Act of 1933 was passed, must now survive the scrutiny of the House Energy and Commerce Committee, the panel that has jurisdiction over securities matters.

The key question is whether Rep. Foley, D-Wash., will limit the amount of time the energy committee, which traditionally has opposed such measures, has to review the bill. Under the speaker's broad powers, he can refer the bill to energy and commerce for a brief period or allow it unlimited time -- a move that probably would kill the legislation during the year and a half that remains of this Congress.

In an attempt to sway advisers in Rep. Foley's office to limit the energy panel's review, the House Banking Committee on Thursday voted 34 to 14 to strip the bill of provisions dealing with the Securities and Exchange Commission.

Banking committee Chairman Henry B. Gonzalez, D-Tex., said preliminary discussions with representatives in the speaker's office indicate that such a move may persuade Rep. Foley to limit the energy committee to a short review.

But Rep. Doug Barnard, D-Ga., a leading proponent of financial reform, said his conversations with House parliamentarians indicated that the action will have little bearing on the ultimate disposition of the matter. He reminded panel members that the energy and commerce panel scuttled a bill in 1988 that would have shattered Glass-Steagall.

Meanwhile, Rep. John Dingell, D-Mich., chairman of energy and commerce, has given a clear indication that he intends to go over the banking committee bill with a finetooth comb. In a June 26 letter to Federal Reserve Board Chairman Alan Greenspan, Rep. Dingell said the banking panel's proposed changes for regulating the hybrid financial institutions the bill would create "would make credit risks and market risks less transparent to regulators, and therefore more difficult to monitor and evaluate.

"We do not believe that this would be in the public interest nor are we interested in repeating the deregulatory mistakes of the 1980s," he wrote.

The House Banking Committee bill would allow the affiliation of banks and securities firms under a financial services holding company structure. Moreover, the bill would allow commercial firms to own banking institutions under a diversified holding company structure.

The holding company structure is designed to ward off the possibility that financial troubles in businesses unrelated to banking could infect and bring about the collapse of federally insured banks.

The measure was cleared Friday by the panel on a strong, 31-to-20 vote. Rep. Richard K. Armey, R-Tex., indicated after the vote that he mistakenly voted against approval, thinking the tally was for another matter.

Rep. Gonzalez, talking to reporters after the panel had completed its work, said he was "very, very pleased" with the committee's efforts. "The committee confronted issues that were long overdue to be faced," he said, referring to the panel's vote to overhaul the financial industry.

But he said the bill will have to be modified substantially before it can hope to pass in the House because the committee did not approve any meaningful deposit insurance reforms.

The panel defeated several amendments that would have cut back the scope of deposit insurance. In fact, the committee expanded deposit insurance coverage to include public and private pension funds.

Treasury Secretary Nicholas Brady, expressing general satisfaction with the bill, stressed in a statement following the panel's vote that work needs to be undertaken on deposit insurance reform. He applauded the panel for its quick action, and urged the Senate to promptly begin debate.

But the banking committee's work, which stretched over six days, included approval or provisions that:

* Would provide a $180 million federal guarantee for the repayment of bonds borrowed by Rhode Island to pay off depositors at state-insured banks and credit unions;

* Would impose civil and criminal liability on the new financial holding companies for violating limits on transactions between bank and securities affiliates; and

* Would allow the Fed to have abroad discretion in granting approval for banks to affiliate with securities firms.

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