WASHINGTON - Negotiators were expected to reach a compromise by today on digital signature legislation, clearing the way for quick adoption by the House and Senate.

Assuming no last-minute problem crops up, President Clinton is expected to sign the bill.

Senate Banking Committee Chairman Phil Gramm continued Thursday to fight for changes sought by the financial services industry. Though he is expected eventually to support the legislation, Sen. Gramm's reputation for stalling popular bills that he opposes caused observers to hedge otherwise upbeat forecasts.

Under the legislation, contracts signed on line would have the same legal validity as paper contracts. And the bill would permit financial services companies to make mortgage and other disclosures required by consumer protection laws electronically instead of on paper.

Industry lobbyists are engaged in a delicate balancing act: seeking optimal language governing consumer consent for electronic disclosures, federal preemption, and records retention requirements, while ensuring these demands do not prevent enactment this year.

"We want to get this done in the next week or so," said Edward L. Yingling, chief lobbyist for the American Bankers Association.

Industry officials are wary because Congress has fewer than three months left on the 2000 legislative calendar and the political currents in an election year can shift abruptly. "Something unexpected can come along, and [a bill] that is not done can be blown up," Mr. Yingling said. "We are so close."

The final details have created a rift among Republicans, sources said. The compromise has the requisite majorities of signatures among House and Senate conferees to move ahead. But these majorities are composed of Democrats and some key Republicans such as House Commerce Committee Chairman Thomas J. Bliley Jr. and Senate Commerce Committee Chairman John McCain.

The legislation's sponsors and Republican leaders were working to win over as many reluctant Republicans as possible to make the bill look more bipartisan.

Though details remained in flux Thursday afternoon, it appears that all sides - including the Clinton administration - have found middle ground on two of the three outstanding issues: federal preemption and record retention requirements.

The final version is expected to bar states from passing laws that would require lenders and others to send copies of some consumer disclosures by mail, but Sen. Gramm and industry officials are worried that even the preemption language in the latest version is not tight enough.

An earlier version would have required companies to retain paper versions of mandatory records until Oct. 1, 2001. After that, electronic copies would suffice. Law enforcement officials had sought a delay in implementation, but industry officials wanted to be able to send electronic disclosures immediately. The effective date in the final version is expected to be March 2001, or regulators may be given flexibility to create exceptions.

Charles Schwab & Co. and some other financial services companies are still fighting a requirement that, when someone consents online to receive electronic disclosures, companies run a test to determine whether the person has the proper software and hardware to get the disclosures. Opponents argue that this could cause them to run multiple tests if companies serve customers using electronic mail, the Web, or other formats and use different software in each process. They also say the wording of the requirement is vague and would invite class actions.


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