Citicorp this week finally threw its considerable weight behind the financial reform bill the House plans to vote on next month.

"We are going to go out and work for the bill," Citicorp lobbyist Stephen A. Hopkins said.

For months Citicorp vigorously lobbied against the legislation and was still opposed April 6 when its $70 billion merger deal with Travelers Group was unveiled.

But on Tuesday Citicorp chairman and chief executive John S. Reed conceded the inevitable: The combined company needs the flexibility the bill offers.

"We would like to see a legal structure similar to" the proposed legislation "without some of the negatives within that," Mr. Reed said. "We will try to see if we can support a broader, better bill."

He said that he and Travelers chairman Sanford I. Weill "both have a common view of what would constitute an appropriate bill."

The legislation would tear down the barriers preventing banks, insurers, and securities companies from owning each other.

The "negatives" Mr. Reed referred to include limits on national banks, particularly activities that may be conducted in bank subsidiaries-a concern shared by the Clinton administration.

Citicorp's climbing on board gives the bill some momentum. House Republican leaders have vowed to bring the legislation up for a vote the week of May 4. Insurers like Travelers and many securities firms strongly support the measure.

But Republicans still need the Clinton administration's en-dorsement.

As long as Treasury Secretary Robert E. Rubin opposes the bill, it will not be enacted this year, predicted Kenneth A. Guenther, who as executive vice president of the Independent Bankers Association of America is another key critic of the legislation.

"The key dynamic, in terms of whether there is going to be legislation this year, is the position of Secretary Rubin," he said. Even if Congress fixes provisions restricting bank subsidiaries, the Treasury has many other problems with the bill.

On March 31-the day House leaders conceded they did not have the votes and pulled the financial reform bill from the floor-President Clinton issued a statement that outlined five changes needed to gain the administration's support.

But for every change lawmakers agree to, they risk losing allies. For example, any changes to appease the administration by returning power over bank insurance sales to the Comptroller of the Currency are likely to threaten support from the insurance industry.

Supporters suggested Citicorp accept the bill as is, saying it would easily accommodate the merger.

"The structure they intend to create resembles very much the structure in the legislation," said David J. Pratt, senior vice president of federal affairs for the American Insurance Association.

If the Federal Reserve Board approves the merger, the combined firm would become a bank holding company and be forced to sell its insurance underwriting and other operations barred to bank holding companies.

Granted, Citigroup, as the combined company would be known, could exploit regulatory loopholes and continue to sell a broad range of financial products for two to five years.

But a congressional overhaul of the nation's financial laws would greatly simplify Citigroup's operations. "The clearest, best answer is for Congress to change the underlying law," said Roger N. Levy, a lobbyist for Travelers.

Most importantly for the merger partners, the legislation would remove provisions in the Bank Holding Company Act that prohibit affiliations between banks and insurance companies.

It also would topple Glass-Steagall Act barriers that would hinder the combination of Citicorp's commercial banking operations and Travelers' Salomon Smith Barney securities arm.

The bill would preserve the two companies' thrift charters, although Travelers would lose the broad commercial investment and underwriting powers it enjoys as a unitary thrift holding company once it affiliates with Citicorp's national bank. Most of those limitations would be moot, however, given the powers Citigroup and competing financial holding companies would receive under the bill.

Citicorp uses its thrift as the basis for a nationwide consumer banking operation outside of New York with $17.9 billion of assets. Travelers last fall received regulatory permission to convert its Delaware-chartered commercial bank into a federal thrift, which has $395 million of assets, primarily from mortgage lending and trust activities.

The companies have not said how they plan to use these charters after the merger. As the legislation stands now, the thrift charter is protected, but political dealing could change these provisions.

Some Capitol Hill sources expect Republican leaders to reinstate some limits on thrifts to gain more support from the banking industry.

Some financial industry executives have balked at the bill's 15% cap on revenues from nonfinancial investments, but Mr. Levy said that limit would not pose a problem for Citigroup.

The bill also would let Citigroup distribute mutual funds through a securities subsidiary. Under current law, the combined company would be forced to hire an outside company to distribute mutual funds.

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