Saying he is "very encouraged," Senate Banking Committee Chairman Alfonse M. D'Amato pledged Wednesday to try to bring financial reform legislation to a vote soon.

"The strengths as well as the problems in the bill are becoming clearer," the New York Republican said at the third hearing on the reform bill passed last month by the House.

"We are already at work attempting to address some of the concerns expressed by" the legislation's principal opponents-Treasury Secretary Robert E. Rubin and the banking industry. No decisions have been made, Sen. D'Amato added, but a committee vote could come "in the near future."

However, testimony by consumer groups showed that opposition extends beyond Mr. Rubin and most of the nation's bankers.

Activists told committee members that they oppose financial reform legislation because it would let banks skirt community reinvestment requirements.

"We are concerned that the bill would diminish the effectiveness of the Community Reinvestment Act," testified Allen J. Fishbein, general counsel of the Center for Community Change. "Financial conglomerates envisioned under the bill would shift activities to holding company affiliates, where CRA does not apply."

Debate over CRA signaled the kind of ideological issue that could bog down an already controversial bill with fragile prospects for enactment. A similar dispute has slowed Senate consideration of far less complex legislation to expand credit union membership limits.

"The community investment issue is going to be the more contentious issue we deal with," said Sen. Lauch Faircloth, R-N.C.

Sen. D'Amato warned that failure to pass legislation could represent a larger threat to consumers.

"It is very easy to be opposed," Sen. D'Amato said. "Take a look at the totality of what we are dealing with, and understand that things are going to speed up if Congress fails to act. You are going to have continued megamergers, and there is going to be very little responsible oversight."

Consumer advocates also raised concerns that the bill promotes consolidation of the financial services industry, threatens to override state consumer protection laws, fails to guard private customer information, and makes the application process for cross-industry mergers such as Citicorp and Travelers Group too easy.

Activist Ralph Nader suggested the Senate Banking Committee throw out the House bill and write more pro-consumer legislation. Consumers Union insurance counsel Mary Griffin said any improvements should be made to the existing bill because it contains some helpful consumer protections and prevents banks from owning commercial businesses.

Mr. Nader supported extending CRA to insurance and other nonbank affiliates, cracking down on redlining by insurers, and prohibiting federal rescues of banks that merge with other financial companies.

"If Congress stampedes this legislation, as the giants in the financial industry demand they do, the day will come when the corruption or speculative risks facilitated by the bill will materialize into gigantic taxpayer obligations to bail out these debacles," Mr. Nader said.

The consumer witnesses also backed Mr. Rubin's demand that new financial powers be permitted in bank operating subsidiaries because the Treasury Department-which is part of the executive branch and regulates national banks through the Office of the Comptroller of the Currency-is more accountable to the public than the independent Federal Reserve Board. (Fed Chairman Alan Greenspan wants new powers restricted to bank holding company affiliates.)

"The direct accountability model of the OCC does serve communities of color and working poor communities better," said John E. Taylor, president of the National Community Reinvestment Coalition.

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