With opposition to megamergers mounting on several fronts, the top national bank supervisor vowed Tuesday that oversight of these future giants will be intense.

"We are not complacent," said acting Comptroller of the Currency Julie L. Williams. "Given the size of the organizations being formed, problems must not be allowed to fester."

Ms. Williams is the first banking agency chief to speak out on the string of megadeals announced since Citicorp and Travelers Group unveiled their merger April 6.

She and other regulators are expected to lay out their plans for supervising huge conglomerates at a House Banking Committee hearing this morning. Many observers expect a combative hearing, with several lawmakers and consumer activists condemning the increasing consolidation of the financial services industry.

"The American public has been skeptical about allowing the financial services marketplace to be monopolized by a handful of large institutions," Banking Committee Chairman Jim Leach said last week.

The witness list includes representatives from eight financial institutions involved in jumbo merger deals, including the lead lawyers for Citicorp and Travelers. Federal Reserve Board Governor Laurence H. Meyer and consumer activist Ralph Nader are also scheduled to appear.

Rep. Joseph P. Kennedy 2d, D-Mass., is likely to preview the debate at a news conference shortly before the hearing. Rep. Kennedy said he will oppose the deals on the grounds that they will result in diminished community lending, discriminatory credit practices, and higher bank fees. On Tuesday a number of community groups protested at Citicorp's headquarters. (See story on page 2.)

At the hearing, Treasury Under Secretary John D. Hawke Jr. and the banking regulators are expected to come under fire for letting financial institutions diversify and combine beyond the bounds of the law. Government officials also will be queried on their readiness to supervise such large institutions.

In her speech at a Women in Housing and Finance luncheon, Ms. Williams insisted regulators are prepared. "I believe that we have the right approach and the right tools to supervise the large institutions," she said.

Bank regulators are already beginning to address specific concerns posed by the new conglomerates, she said. For instance, merging firms will be required to spell out their strategy for keeping key personnel, merging technology systems, and making sure that cost cutting does not cripple essential internal controls.

After a merger, risk management systems must place special emphasis on how nonbank affiliates affect the bank, she said. Banks must have procedures in place to detect and limit any risks that could spread from insurance, securities, and other holding company units.

Banks also must be prepared to handle huge volumes of data for profitability analysis, stress testing, and risk modeling. "The combined entities will have to be ready to capture, process, and monitor a larger volume of transactions-millions more-than has ever been attempted," Ms. Williams said.

She added that OCC examiners experienced in large mergers will meet soon to identify "best practices" for supervising huge institutions.

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