The California Museum of Science and Industry normally is swarming with kids exploring the jet on its front lawn and the roses in its central garden.

But for two days last week the Los Angeles institution was transformed into a battleground between civic leaders and big banks.

The Federal Reserve held two days of hearings at the museum on bids for First Interstate Bancorp. The bankers touted their community investment pledges while local lawmakers complained about the loss of branches and jobs, and activists bemoaned the unmet credit needs of their neighborhoods.

The testimony often was emotional, with local politicians pleading with the Fed to kill the deal.

But these hearings on big bank mergers - nine days' worth on three deals since August - rarely focus on what counts.

Though it is rarely mentioned in the testimony, Regulation Y is what rules. Reg Y requires the Fed to block mergers that are anti-competitive or that hurt the "convenience and needs" of the community.

For example, if a bank has a lousy track record under the Community Reinvestment Act, it is clearly not meeting neighborhood needs.

The public's failure to focus on Reg Y is causing a growing number of bankers, community activists, and even some Fed officials to question whether the forums are anything more than show.

Charles Grice, executive director of the Community Reinvestment Institute, said last week's hearings will be a test of the Fed's commitment to considering public comments before voting on a merger application.

"They really raise the question of whether this is a mythical ritual or real decision-making," he said. "I don't know."

Some community activists said changing the format of the hearings would vastly improve the debate. Matthew Lee, executive director of the Bronx- based Inner City Press/Community on the Move, said the Fed should require bankers to answer questions from the community.

"The whole idea is to have the opposing positions clash so you can learn what the truth is," Mr. Lee said. "You need some give and take."

Sarah Ludwig, director of the Neighborhood Economic Development Advocacy Project in New York, said the Fed should limit the hearings to people protesting the deal. There's no point hearing from groups that receive lots of money from the bank, she said.

The banking industry, however, is less than enthused with these ideas. "I could see it getting out of hand, with accusations flying back and forth," said Richard Whiting, general counsel to the Bankers Roundtable. "It wouldn't be productive."

Mr. Whiting said the current format works, exposing senior Fed staffers to the major arguments of the bankers and activists. "Big banks do a lot of work in the community that is never recognized," Mr. Whiting said. "This gives them a chance to say all these thing in a public way."

But bankers who have experienced a public hearing also said it was worthwhile. "I think it was very important for (Chemical Bank chairman) Walter Shipley to look all the regulators ... in the eye and say the goal of a new Chase is exemplary service to its community," said Donald L. Boudreau, Chase's vice chairman for retail financial services.

Janet Yellen, the only Fed governor to attend last week's hearing, said it's important for the public to be able to tell the central bank about its concerns.

"We get some perspective from members of the community and it adds to the information base we have," she said.

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