Sounding supportive of recently proposed megamergers, federal antitrust regulators told a congressional hearing Wednesday that consumers will not necessarily be harmed by bank consolidation.

John M. Nannes, deputy assistant attorney general for antitrust, said mergers are "less likely to threaten competition" in banking than in other industries because consumers may turn to thrifts and credit unions for similar services.

William J. Baer, director of the Federal Trade Commission's bureau of competition, said mergers could even lead to more competition, lower prices, and improved access to services.

Republicans at the House Judiciary Committee session, where the competition regulators testified, went along with their willingness to let market forces operate. Democrats, by contrast, criticized what they viewed as passivity.

"Gentlemen, don't you see any problems here?" said Rep. John Conyers Jr., D-Mich. "We have got a big problem here. ... The NationsBank and Bank of America (deal) and their consolidations in different markets create antitrust problems because they can suppress competition."

Rep. Conyers, the panel's ranking Democrat, raised concerns about big banks monopolizing automated teller machine networks and credit card sales and gaining the power to charge excessive fees.

Rep. Bill McCollum, R-Fla., backed the approach articulated by the antitrust regulators: that competitive effects be assessed in each local market rather than on a national basis.

"That is the only way to look at it," said Rep. McCollum, who also serves on the House Banking Committee."There are a lot of choices out there."

Federal Reserve Board Governor Laurence H. Meyer said lawmakers should not assume that banking consolidation on the national level translates into reduced consumer choice locally.

Between 1980 and 1997, the average percentage of local-market deposits controlled by the three largest banking organizations held steady, Mr. Meyer told the Judiciary Committee. Limited geographic overlaps among merging banks, growing numbers of de novo banks, and defections of dissatisfied customers to locally based competitors explain this trend, he said.

"To the extent that any banks merge that are in overlapping markets, it will raise competitive concerns and will be carefully analyzed," Mr. Meyer said in response to heated questioning by Rep. Conyers.

Mr. Nannes of the Justice Department warned that the merger frenzy could squeeze small- and midsize-business borrowers that would end up with fewer sources of credit.

The regulators noted that they have taken steps to encourage post-merger competition by requiring divestitures. For instance, NationsBank Corp. had to sell 124 Florida branches with $4.1 billion of deposits before merging with Barnett Banks Inc.

The representatives of Justice, the FTC, and the Fed said they cooperate well on bank merger reviews and consider enforcement powers under current laws sufficient.

They said financial reform legislation recently passed in the House would clarify that when a nonbank such as Travelers Group merges with a bank such as Citicorp, bank subsidiaries must comply with current bank merger laws and nonbank units have to meet requirements that apply to them.

Testifying later, Citicorp general counsel John J. Roche said his organization's plan to merge with Travelers Group, which helped precipitate Wednesday's hearing, would result in a broader array of products.

"The test of whether or not we succeed will be in the hands of those customers, who will decide whether the products and services we provide, at the prices charged, ultimately satisfy their needs," he said.

However, community bankers and consumer advocates complained that consolidation will hurt consumers, and that current laws treat small-bank mergers unfairly.

"The current rules have the perverse effect of encouraging community banks to merge with out-of-area large banks, rather than merge with each other to increase efficiencies and competitiveness," said William L. McQuillan, president of City National Bank, Greeley, Neb., and of the Independent Bankers Association of America.

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