Prospects for a breakthrough agreement among regulators on financial reform appear to be fading fast.

Testifying Tuesday before the Senate Banking Committee, Federal Reserve Board Chairman Alan Greenspan gave no ground in the debate on whether to let banks conduct securities underwriting and exercise other new financial powers through operating subsidiaries.

Mr. Greenspan held firmly to the position, last asserted at a House Banking Committee session two weeks ago, that expanded powers be housed in units of Fed-regulated bank holding companies because they are unsubsidized and safer.

Placing them directly in bank subsidiaries would provide "an unfair competitive advantage over comparable securities and insurance firms," Mr. Greenspan said, and would "lead to greater risk for the deposit insurance funds and the taxpayer."

"He was very intransigent," said Victoria P. Rostow, a lawyer with Gibson, Dunn & Crutcher in Washington. "It looks like some kind of a compromise is either going to have to be imposed by one of the committees, or the legislation is not going to happen or happen quickly."

When Treasury Secretary Robert E. Rubin offered two weeks ago to drop his demand that bank subsidiaries be able to underwrite insurance and develop real estate, supporters of the legislation thought Mr. Greenspan would feel compelled to reciprocate with a compromise of his own.

Observers disagree on whether the Fed chief is sticking to principle or just being stubborn.

"Treasury has shown some flexibility," an insurance lobbyist said. "The Federal Reserve Board doesn't seem to have shown any. People are beginning to look at them (and say), 'You can't be this rigid when everyone else is being flexible.'"

Joe Belew, president of the Consumer Bankers Association, said Mr. Greenspan has shown conviction by invoking certain principles and not caving in politically.

"He has such total credibility," Mr. Belew said, "that people will see that and say, 'He must have his reasons. We'd better listen.'"

The Fed chairman was challenged Tuesday by several Republican lawmakers. Sen. Rod Grams, R-Minn., suggested that Mr. Greenspan's concerns that banks would abandon the holding company structure if operating subsidiaries were granted broad powers-costing the Fed precious insight into the economy-were unfounded. He noted that many companies conduct mortgage activities in holding company units, even though they are permitted within banks.

Mr. Greenspan said mortgage banking units are housed in holding companies because the tax code favored it. Now that the tax law has been changed, institutions are moving mortgage activities into banks, he said.

Sen. Robert F. Bennett, R-Utah, said he disagrees with Mr. Greenspan on operating subsidiary powers. The senator said it is no longer valid to view insurance and securities underwriting as equally risky. "We should be looking at the specific risks," he said.

Mr. Greenspan's intransigence appears to doom hopes that the House and Senate could adopt nearly identical reform bills based on a Fed-Treasury compromise.

Instead, several lobbyists said the legislation may proceed on separate tracks in the House and Senate, with lawmakers postponing a final settlement until the conference committee stage-assuming the bill passes both chambers.

House Banking aides are working to blend the bills of the committee's chairman, Rep. Jim Leach of Iowa, and the ranking Democrat, Rep. John J. LaFalce of New York. A final bill could tilt on operating subsidiaries toward Rep. LaFalce's version, which would let banks directly underwrite securities and conduct merchant banking activities and has been endorsed by Mr. Rubin.

Mr. Greenspan said two weeks ago that he could grudgingly support a proposal by Sen. Phil Gramm, Senate Banking's chairman, that would let national banks under $1 billion of assets underwrite insurance and securities.

"If Mr. Greenspan can live with Gramm's proposal, and Mr. Rubin can live with the Leach-LaFalce proposal, it's a perfect opportunity" for a compromise, said Annie Hall, government relations director for Bank One Corp.

Senate Banking holds its second of three days of hearings today with testimony by Mr. Rubin and other regulators. Sen. Gramm, R-Tex., said a legislative proposal would be ready Friday, before a scheduled committee vote next week.

On another subject, Sen. Gramm-who supports preserving current law on unitary thrift holding companies-quizzed Mr. Greenspan about his opposition to such firms because they may engage in banking and commercial activities. Mr. Greenspan said it was not too late to close the "unitary thrift loophole" by grandfathering applicants for unitary thrifts because most of them are nonfinancial companies.

Meanwhile, insurance lobbyists-who fiercely oppose Sen. Gramm's draft bill that was released last week-met with the Senate Banking chairman Monday and are awaiting possible changes to the insurance sections.

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