The House Banking Committee plans to have credit union reform legislation ready by the end of the week, Chairman Jim Leach said Monday.

The committee is still to decide whether credit unions should be taxed and how membership should be limited, Rep. Leach said cautiously in response to assertive questions from bankers at a political fund-raiser in Chicago.

Lawmakers also are still wrestling with whether to join credit union legislation with the financial reform bill, the Iowa Republican said.

Should House leaders fail to link the two, Rep. Leach said, it may be difficult to "build momentum" for the controversial financial reform bill on its own.

"I can't say with certainty that bank modernization will pass," he said. "There are huge differences within and between each industry group."

Banking lobbyists, who oppose blending the two bills, said they are seeing encouraging political signs. "The idea of linking them has a little less heat than it did last week," said Edward L. Yingling, chief lobbyist for the American Bankers Association.

As House Republicans race to pass financial reform in the next three weeks, they must maneuver around other potential roadblocks.

John D. Hawke Jr., the Treasury Department's under secretary for domestic finance, said Monday that the bill House Republicans unveiled last week represents "a major attack" on national banks.

"The national bank charter has been singled out for special and discriminatory treatment," Mr. Hawke told a meeting of the National Bankers Association and American League of Financial Institutions.

The critical remarks - albeit not a surprise - are the first official word from the Clinton administration since the House Banking and Commerce committees released the bill last week. Under pressure from House Speaker Newt Gingrich, the two committees grudgingly hammered out a compromise from conflicting versions of financial reform that they had each approved last year.

Mr. Hawke labeled as "gratuitously bad" key provisions in the bill governing insurance sales and the use of direct operating subsidiaries by national banks.

The legislation would unfairly give bank subsidiaries fewer powers than subsidiaries of bank holding companies and "completely obliterates" the Office of the Comptroller of the Currency's effort to grant bank subsidiaries expanded powers, Mr. Hawke said.

Also, banks could enter the insurance sales business in a state only by buying a licensed insurance agency. "It is kind of a protection for existing insurance agencies," he said. And national banks would still be constrained by the "archaic" limitation that they may only sell insurance from a town of 5,000 people, he said.

The Treasury official also knocked the bill for weakening the thrift charter and eliminating the edge that decisions by the comptroller have in court over conflicting state laws.

"The bill exposes national banks in a very dangerous way to discriminatory state laws," Mr. Hawke said.

The bill would jeopardize the dual banking system because states could let institutions that they charter conduct expanded activities through operating subsidiaries and start de novo insurance sales operations, he added.

Although the insurance and securities industries have generally supported the legislation, representatives of banks and thrifts raised complaints similar to Mr. Hawke's.

The bill would curtail the branching powers of thrifts across state lines and open up to legal challenges the thrift charter's pre-emption of state laws, Citibank vice chairman Charles E. Long wrote House Republican Conference Chairman John A. Boehner on Friday.

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