Robert T. Parry, president of the Federal Reserve Bank of San Francisco, brings an economist's viewpoint to his supervisor's job.

He's an avid free-market supporter who favors bank entry into the insurance and underwriting businesses and sees few problems with the ongoing consolidation of the industry.

But his bank is a strong advocate of the Community Reinvestment Act, organizing scores of prominent training and loan programs.

"This job has a lot of relevance," he said in a recent interview. "These issues I deal with on a day-to-day basis do have meaning and significance and I get the impression that I can make a difference on economic and financial issues."

In many ways, Mr. Parry has his dream job. A career economist, he now gets to debate - rather than predict - the future of economic policy as a member of the Federal Open Market Committee.

"The thing I'm most interested in is monetary policy," Mr. Parry said. "That's why I'm in this job."

Economics and banking have been part of Mr. Parry's life for more than three decades. Before taking his current job in 1986, he served for 16 years as an economist at the now-defunct Security Pacific Bank. Earlier, he had been an economist with the Federal Reserve Board for five years. Former colleagues describe Mr. Parry as driven, but not aloof.

"There is no question that he is a very down-to-earth person," said Exxon Corp. chief economist Kathleen B. Cooper, who worked with Mr. Parry at Security Pacific. "He's someone who made everyone feel a part of team."

He's also an inflation hawk who guided a bank through the tumultuous 1970s. "One of the things he had to do as a banker is deal with the destruction of wealth and values that inflation caused," said P. Michael Laub, who worked with Mr. Parry at the Fed in 1969 and later became chief economist with the American Bankers Association .

Despite his preference for monetary policy, Mr. Parry said he expends considerable energy on other issues. "As the CEO of an organization of 2,500 people, one has a lot of things to spend time on," he said. "I have to deal with directors, personnel issues, auditing, and legal issues. This is a multidimensional position."

Industry officials praise Mr. Parry's leadership, saying he has made the San Francisco Fed a resource - rather than a burden - for banks.

"He's one of the most respected members of the banking community," said Larry Kurmel, executive director of the California Bankers Association. "He's knowledgeable, brings added value to the table, and has anticipated changes to the market."

Mr. Parry's free-market beliefs are evident whenever he discusses the merger-mania that has swept California, the most populous state in his region.

"I don't fear consolidation when it comes to its impact on consumers and business," Mr. Parry said. "Competition for loans is more than sufficient."

The equation is simple, he said. There are far too many banks and scores of hungry nonbank competitors all vying for the same business. In this environment, he said, consolidation can't possibly hurt the public.

His pro-consolidation stance doesn't sit well with community activists, who charge the Fed is far too quick to approve megamergers. "The fewer players, the less the competition, the more it hurts the interests of consumers," said John Taylor, president of the National Community Reinvestment Coalition.

Mr. Parry said he finds the criticism amusing. "Isn't it interesting that here we are in an industry of 10,000 debating if the change from 14,000 has hurt competition," he said. "You have other industries with many fewer players where that isn't a concern."

Consolidation was thrust upon Mr. Parry from day one of his current job. In the course of his first appointment, he was informed by Paul Hazen, then president and chief operating officer of Wells Fargo & Co., that the San Francisco institution planned to acquire Crocker National Bank later that week. That February 1986 deal was the largest acquisition in U.S. banking history to that date.

Since then, Mr. Parry has seen BankAmerica Corp. acquire Security Pacific, Union Bank merge with Bank of California, U.S. Bancorp assume West One Bancorp, and Wells Fargo purchase First Interstate Bancorp.

More mergers are on the way, he predicted. "We could see the number of banks go through 5,000 in five to 10 years," he said.

Consolidation isn't the only thing on Mr. Parry's mind. The Fed president said he's proud of the CRA efforts undertaken within his region.

"I don't see how anyone who is objective can't be impressed with the community reinvestment efforts of our top several banks," Mr. Parry said.

That doesn't mean he isn't watching out for small institutions. The San Francisco Fed has establish the California Community Reinvestment Corp. and several other lending programs to help institutions that don't have the resources of BankAmerica or Wells Fargo.

These small banks pool their funds to provide multifamily, low-income housing loans. The Fed also has established a similar program for small- business lending.

"We are trying to provide as many opportunities as possible for banks to achieve their CRA obligations," he said. "We are looking for ways to be helpful. It is just that simple."

Bankers praise these efforts, saying they make it easy for institution to make profitable CRA loans.

"Bob Parry has taken a leadership position to enable the banks of the Federal Reserve district to participate in loan funds and other activities that may not have come to their attention without his leadership," said Donald Mullane, BankAmerica's executive vice president for corporate community development. "We value the opportunities he brings to our attention."

Most community activist praise Mr. Parry's efforts, too. Mr. Taylor, the community reinvestment official, said the reserve bank's training programs have helped bridge the gap between lenders and activists.

But Robert Gnaizda, general counsel to the Greenlining Institute, said the San Francisco Fed should be doing more than other reserve banks to promote CRA.

"Leadership should come from San Francisco, where all the leading CRA banks are," Mr. Gnaizda said. "We expect the regulators should be ahead of those they regulate."

Mr. Parry's free-market beliefs are evident in a whole range of other banking issues. He supports bank entry into the securities and insurance businesses, saying neither is more risky than traditional lending.

"In terms of the health of the industry, this kind of fragmentation makes no sense," he said. "We ought to be thinking in terms of a financial services industry where participants can provide any service."

He also doesn't understand why thrifts should pay more for deposit insurance than banks. "To me, this is a competitive disadvantage that you cannot allow to persist," he said. Congress should solve the problem by merging the bank and thrift charters, he said.

A conservative at heart, Mr. Parry isn't quick to latch onto radical ideas. Take the proposal by fellow Fed district bank president Thomas Hoenig of Kansas City to let banks to give up their deposit insurance in exchange for less oversight. Several Fed presidents have staked out positions supporting or opposing this fundamental change. Not Mr. Parry. He called it a "possible approach" that merits further study.

Ever the realist, Mr. Parry said he knows credit unions are not going to lose their tax-exempt status any time soon. But he said regulators should prevent credit unions from expanding their field of memberships even further.

Mr. Parry is not content to sit in his office, even though it does afford a stunning view of the Bay Bridge and San Francisco's financial district. He visited all nine states in his district last year and takes an annual trip to Far East countries to meet with bankers and government officials.

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