The problem for financial reform may not be that the faces in Congress have changed but that the regulators are still the same.

Federal Reserve Board Gov. Laurence H. Meyer and Assistant Treasury Secretary Richard S. Carnell gave no hint of compromise during an ugly debate at a Federalist Society conference last week.

It was a jarring reminder that reform supporters have more to worry about than the departure of two key allies, Senate Banking Committee Chairman Alfonse M. D'Amato and House Speaker Newt Gingrich.

The two regulators-whose dueling positions and sometimes prickly personalities earned them seats on opposite sides of the podium-repeated old arguments about operating subsidiaries, the deposit insurance subsidy, and safety and soundness. Their sniping comments drew snickers from the audience and reinforced the commonly held opinion that gaining regulatory power is their real goal.

"This is pitiful," a veteran banking lawyer muttered.

Moderator Robert J. Giuffra Jr., a lawyer at Sullivan & Cromwell in Washington and a former Senate Banking Committee staff member, billed the showdown as "the ultimate turf fight," and the regulators did not disappoint.

Their messages diverged from the start.

Mr. Meyer, whose Fed backed the reform bill that passed the House this year but then stalled in the Senate, argued that Congress must update Depression-era laws to keep pace with rapidly changing financial markets. Otherwise, he argued, banks will continue exploiting loopholes created by regulators.

"Only Congress has the ability to fix the overarching framework of our financial laws in a way that is fair to all of the industry players and protects the taxpayer," he said.

But Mr. Carnell, whose agency opposed the legislation and talked about a possible presidential veto, countered that lawmakers were trying to restrict the market by outlawing certain corporate structural options.

"Real financial modernization ... occurs in the marketplace, not in the halls of Congress," Mr. Carnell said. "Some people, including some here in Washington, lose sight of this point. They equate 'financial modernization' with the legislative process-as though the whole exercise were a giant game of Simon Says."

Tensions heightened when Mr. Carnell likened the political debate to "a circular firing squad" of competing industry and regulatory interests that foils reform each year. He brought a chart showing a bank with an "X" through a box marked "subsidiary" to symbolize the Fed's opposition to underwriting and other new financial powers for bank operating subsidiaries.

"One of us wants to have the structure just one way; that makes them the monopoly regulator," Mr. Carnell said. (The Office of the Comptroller of the Currency, a Treasury unit, regulates national bank subsidiaries. The Fed favors housing new powers exclusively in holding company units, which it supervises.)

Mr. Meyer, who gave the chart the thumbs-up sign and a smirk, later accused Mr. Carnell of painting the Fed as the villain when the Clinton administration's veto threat was the real obstacle. "If you just think about the positions that Treasury has taken, boy, they are doing a good job of protecting turf, I'll tell you that," Mr. Meyer said.

Both men pledged to try to compromise, but the words were uttered through gritted teeth.

Mr. Meyer said he hoped the two sides would "make significant attempts" to reconcile their differences. "That is a much more positive response than we have received in the past year," Mr. Carnell said sarcastically.

"When did you ask?" Mr. Meyer replied.

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