On the first day of negotiations over financial reform Tuesday, Senate Banking Committee Chairman Phil Gramm offered an olive branch on the unitary thrift issue.

"I believe the provision in the House does represent a compromise that perhaps we could support in the Senate," the Texas Republican told members of the House-Senate conference committee responsible for reconciling the rival reform plans.

However, he also proposed a key change. Instead of letting the Federal Reserve Board decide whether commercial firms could buy unitary thrifts, he said, the bill should give that job to the Federal Deposit Insurance Corp. The Senate bill bans such acquisitions.

Sen. Gramm held firm on other issues. He urged that most of the privacy provisions in the House bill be removed and handled in separate legislation. And he emphasized his opposition to broad powers for bank subsidiaries. He played down disagreements over community reinvestment requirements.

Lawmakers elected House Banking Committee Chairman Jim Leach to head the conference committee.

"We all know this is a very controversial bill," Rep. Leach said, warning that a consensus is not "a foregone conclusion." He added: "I am optimistic but at the same time truly cautious on a number of these issues."

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