WASHINGTON - The Federal Reserve this week plans to formally respond to the Clinton administration's regulatory consolidation proposal.

Fed chairman Alan Greenspan is expected to write a guest column in The Wall Street Journal explaining the central bank's opposition to the Clinton proposal.

Vice chairman David W. Mullins is expected to follow with a column on the international considerations of regulatory consolidation.

Mr. Greenspan's comments would be his first in public on the administration's plan to consolidate the regulatory functions of the Fed, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., and the Office of Thrift Supervision.

The Clinton Plan

According to the administration plan, bank regulation would be conducted through a new Federal Banking Commission.

The FDIC would continue as the insurer of bank deposits and the Fed would continue to set monetary policy, administer the payments system, and provide liquidity to financial markets through the discount window.

Secretary of the Treasury Lloyd Bentsen presented the administration's plan in a Washington Post editorial on Nov. 23.

The Fed responded to the proposal with a two-sentence press release, an uncommon move for the low-key agency. The statement indicated that the Fed would not support any plan that removed its "hands-on role in banking supervision" because that would limit the stability of the financial system and the effectiveness of monetary policy.

Checks and Balances Cited

In an interview on Monday, Fed Governor John P. LaWare said that the Fed's opposition to the proposal goes beyond the agency's wanting to maintain regulatory power.

"We would have opposed a single regulator even if it had been the Fed," he said. "I think the checks and balances of a dual banking system are healthy."

Mr. LaWare has been negotiating with the administration on behalf of the central bank for several months.

Seen as Too Large

His remarks echo other Fed governors, who have spoken out against the administration plan.

Both Mr. Mullins and governor Susan M. Phillips have said that for the central bank to be able to effectively implement monetary policy, it must have its hand in banking regulation as well.

Ms. Phillips, a former head of the Commodity Futures Trading Commission, also argued last week that a single regulator of that size would be too unwieldy to be effective.

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