Proclaiming a major breakthrough on financial services reform, bankers and insurance agents struck a compromise Wednesday on rules that would govern insurance sales.

Yet disputes over Community Reinvestment Act enforcement provisions, powers for operating subsidiaries, limits on the sale of unitary thrift holding companies, and affordable checking accounts for the needy still complicate the chances of enactment before Congress adjourns Oct. 9.

Prospects for the bill that would break down Depression-era barriers between the banking, insurance, and securities industries are "very dire," said a staff member for a pro-reform senator. "When you've got one week left, you don't have to do much to stall it."

"There are just too many issues that are not at closure yet," said Paul A. Schosberg, president of America's Community Bankers. "It is within 48 or 72 hours of make or break."

The deal struck Wednesday between the Independent Insurance Agents of America and the American Bankers Association would make technical changes Banking Committee Chairman Alfonse M. D'Amato is expected to insert when Senate debate begins Friday or early next week.

Supporters have tried to demonstrate progress on the controversial bill this week. House Commerce Committee Chairman Tom Bliley on Tuesday announced that he and Sen. D'Amato had cleared another hurdle by granting the Securities and Exchange Commission the authority to decide which new financial products are securities.

But waiting in the wings are a group of senators who oppose the bill for reasons spanning the political spectrum.

Some conservatives led by Sens. Phil Gramm and Richard C. Shelby have vowed to stall the bill with either amendments or other challenges over CRA-related provisions in the bill. They argue the bill would expand CRA to nonbanks for the first time and broaden regulatory enforcement powers by permitting fines of directors and officers of violators.

"We're not going to have a bill unless we work this out," Sen. Gramm said Wednesday. "I don't believe it will become law in its current form."

Civil penalties could go as high as $1 million per day, according to David H. Baris, general counsel for the American Association of Bank Directors. In written answers to questions from Sen. Shelby, Treasury Under Secretary John D. Hawke Jr. agreed that regulators could impose such fines or cease-and-desist orders if banking units of financial holding companies violate CRA laws or written agreements.

Meanwhile, Sen. Slade Gorton, R-Wash., is expected to propose an amendment that would let unitary thrifts be transferred to commercial owners. Sens. Paul Wellstone of Wisconsin, Tom Harkin of Iowa, and other Democrats are expected to fight hard to restore a requirement that banks provide affordable accounts to low-income consumers.

Senate Banking members are still trying to negotiate a compromise between the Treasury and the Federal Reserve Board over which powers to grant bank operating subsidiaries, sources said. A proposal by Sen. Lauch Faircloth, R-N.C., would let operating subsidiaries underwrite securities but bar them from insurance underwriting, real estate development, and merchant banking, an aide said. Sens. Jack Reed, D-R.I., and Rod Grams, R- Minn., want to permit operating subsidiaries to engage in merchant banking as well as securities underwriting, several sources said.

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