As capital-starved consumer finance companies crumble, First Union Corp. is moving in to pick up the pieces.

First Union signaled its interest in the business of lending to credit- impaired consumers with its $2 billion purchase of Money Store this spring. Now the banking company has integrated the purchase and is ready to add market share, said executives at the Consumer Bankers Association's annual home equity conference here.

"We're very bullish on the market," said Jack M. Antonini, executive vice president at First Union.

Independent specialty finance companies have downsized and even filed for bankruptcy at a rapid clip in the past year as funding from Wall Street dried up. Their hardships have left the field wide open for banks to make the higher-rate, higher-risk loans.

Just this week, Aames Financial, Dallas, announced that it is suffering severe liquidity problems and Amresco Inc. shut down its home equity loan securitization unit, leaving close to 130 of its employees jobless. (See story on this page.). And Contifinancial Corp., New York, said it was slashing 446 jobs after large losses.

These announcements followed massive restructurings at United Companies Financial Corp., Baton Rouge, La., and FirstPlus Financial, Dallas, and a bankruptcy filing by Southern Pacific Funding Corp., Lake Oswego, Ore.

First Union's purchase of Money Store showed that subprime lending is "something we believe in," Mr. Antonini said in the conference's opening address. "We're willing to spend a few billion."

Now, with $15 billion in originations this year and a $32 billion servicing portfolio, First Union is the biggest banking company in the home equity business, Mr. Antonini said. And there is still room to grow, he said.

"There's a huge market out there. We still only have 4% or 5%," Mr. Antonini said.

First Union is "uniquely positioned" to take advantage of the shakeout because of its vertical integration, said Christopher Oddleifson, president of First Union Home Equity Bank, Charlotte.

The unit makes and services subprime loans, and the parent company's capital markets division buys wholesale portfolios and securitizes them. "We have all these nets to capture these loans," Mr. Oddleifson said.

The past six months have been spent synchronizing the processes of First Union home equity divisions and Money Store to yield a more streamlined approach, executives said.

First Union used to have four home equity systems, Mr. Antonini said. "Now we offer one home equity product, underwritten and documented the same way."

Partly because of their entrepreneurial approach, finance companies have often been hard for banks to integrate. First Union encountered "no resistance" from Money Store employees, Mr. Oddleifson said, but "there was a lot of back and forth between Charlotte and Sacramento," where Money Store is headquartered.

First Union Corp. is now synchronizing servicing techniques, Mr. Oddleifson said.

Mr. Antonini said that banks, which over the past year have watched the "shakeout of the crazies," will now step in to bring some discipline to the specialty finance market. "Banks will underwrite more conservatively," he said.

But not everyone is as bullish about the market as First Union.

"People are still very skittish about subprime," said Rodney T. Bahr, a partner in St. Louis with KPMG Peat Marwick. "There are two banks retreating for every one upping the ante."

PNC Bank Corp., Pittsburgh, is pushing the envelope in its home equity divisions and "testing the fringes of prime," said Bryan Ridley, senior vice president, consumer lending.

But PNC is decidedly not going to make subprime loans, he said.

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