The compromise financial reform legislation being crafted by Rep. Jim Leach and Sen. Phil Gramm is scheduled to be unveiled Tuesday, but by Friday the lawmakers had still not bridged their differences on central issues.

If the package is introduced on schedule, the House-Senate conference committee is set to begin voting on it Thursday.

Meanwhile, White House Chief of Staff John Podesta said President Clinton would veto any bill that does not meet four criteria. Mr. Podesta's first requirement is that banks be allowed to offer products and services from direct subsidiaries.

"First, the bill must preserve the ability of banking organizations to choose the structure that best serves their customers -- be it through an affiliate or subsidiary structure," he wrote in an Oct. 7 letter to lawmakers. Mr. Podesta insisted that Congress preserve "the current balance of authority among financial regulators."

The White House began threatening a veto relatively early in the legislative process and has repeated it often. But Congress greatly respects the Federal Reserve Board, which has insisted the bill house any new bank powers in holding company affiliates. (The Fed regulates holding companies; a bureau of the Treasury Department regulates national banks.)

Sen. Gramm on Friday cited the turf war in his response to the veto threat.

"I am confident that, in the end, the President will not let a regulatory power grab by the Treasury Department deny the nation this important bill," the Texas Republican said in a statement. "If President Clinton denies America this bill, then we will look forward to 15 months from now, when we will have a new president and, probably, an even better bill."

Mr. Podesta also said the bill should not dilute the Community Reinvestment Act, violate the consumers' financial privacy, or permit depository institutions to affiliate with nonfinancial firms.

It seems Rep. Leach and Sen. Gramm, along with House Commerce Committee Chairman Thomas J. Bliley Jr., have been unable to settle the same issues. Though the final package is expected to reflect the privacy provisions adopted by the House and to tone down the CRA provisions in the Senate version, no deal has emerged on the unitary thrift provisions or the operating subsidiary question.

On Friday, House and Senate sources were sending very different messages. Lobbyists said Rep. Leach had told them Thursday night that the legislation's prospects were "dicey." On Friday his staff was warning, "Don't be optimistic about this bill passing this year."

Though Sen. Gramm, according to lobbyists, described a number of issues as "jump balls," he insisted Congress could approve the bill before adjourning at the end of the month.

House and Senate leaders have penciled in floor votes for Oct. 20 on financial reform, which would eliminate the legal barriers to mergers among banks, securities firms, and insurance companies. Though attempted many times over the last 20 years, this year is the first time such legislation has been approved by both chambers of Congress.

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