In an effort to jump-start stalled financial reform legislation, a key House Republican offered Wednesday to back off his plan to limit new national bank powers.

Rep. Michael G. Oxley, chairman of the House Commerce Committee's finance subcommittee, agreed to let national banks underwrite securities through direct subsidiaries.

The House Banking Committee approved legislation last year that would let bank subsidiaries engage in securities activities, but the Commerce Committee took a stricter stance that would have precluded securities underwriting.

This is the second compromise offer from the commerce panel this month, yet critics are skeptical that it is enough to clear the bill's way.

"Rep. Oxley deserves credit for trying to work out a compromise," said Treasury Under Secretary John D. Hawke Jr. "This unfortunately falls short on a number of scores."

For example, the Treasury Department will not support any legislation that prohibits bank operating subsidiaries from offering any product or service that can be sold by a subsidiary of a bank holding company, he explained.

To placate securities and insurance companies, Rep. Oxley's plan would guarantee the opportunity to challenge in court the federal government's granting of new powers for operating subsidiaries.

Features already in both the Banking and Commerce versions of the bill are retained by the Oxley plan. For example, bank subsidiaries could sell insurance but would be banned from insurance underwriting, merchant banking, and real estate development.

Reaction from the banking industry was unenthusiastic because the Office of the Comptroller of the Currency is expected to grant subsidiaries more powers.

Edward L. Yingling, chief lobbyist for the American Bankers Association, called the proposal "an improvement" but said it falls short of the ABA's criteria for support.

"We believe that national banks should be able to offer all financial services through operating subsidiaries," he said in a written statement.

Others reacted positively. Banks should find the plan "very attractive" because it lets the OCC authorize new powers for subsidiaries and lets insurance and securities companies oppose the agency in court, said Samuel J. Baptista, president of the Financial Services Council.

People key to the debate-Banking Committee Chairman Jim Leach and Comptroller Eugene A. Ludwig-declined to comment, saying they have not had enough time to review the proposal.

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