WASHINGTON:

THE TREASURY Department and Transactive Corp. squared off in federal court over a rule that gives banks a monopoly over the electronic transfer of government benefits. Page 2

LEO KORNFELD, who once fought to save the private sector's student lending system is now fighting to end it. The head of the Department of Education's financial assistance programs, he favors the President's direct loan system because it has "one guarantee, one lender, and one holder." Page 3

REGIONAL BANKING:

THOMAS M. GARROTT, chairman of National Commerce Corp., said four top- level promotions made last week would place more responsibility and accountability with individual managers and allow him to focus on corporate direction and strategic planning. Page 6

CONTINUING its drive to be a leader in shareholder services, Harris Bankcorp has agreed to acquire Banc One Corp.'s stock transfer business for an undisclosed sum. Page 6

COMMUNITY BANKING:

THE PRESIDENT of Farmers State Bank in Madelia, Minn., says community banks should be more like small-town hardware stores. Page 7

JUST THREE WEEKS after its deal to be acquired by a nearby bank fell through, Virginia Beach-based Seaboard Bancorp has agreed to sell to a rival thrift, Life Bancorp of Norfolk. Page 7

MORTGAGES:

EVEN AS Congress slashes the federal budget, a little-noticed move by the Senate Agriculture Committee would give broad new powers to a moribund government-backed institution that securitizes farm and rural-housing mortgages. Page 11

FANNIE MAE said its mortgage portfolio expanded at a 17.4% annual growth rate and its mortgage-backed securities were up 13.6% as the housing market expanded in July. Page 11

CREDIT/DEBIT/ATMs:

THE FINICKY CAT from the 9-Lives commercials is expanding his sales pitch to a new credit card that benefits animal shelters and humane societies. Page 13

PNC BANK CORP. has introduced a cobranded card with a low rate and a rebate designed to attract the three million members of General Nutrition Centers' discount card program. Page 13

ICVERIFY INC., a credit card verification company, wants to parlay three years of experience implementing verification software at golf courses and a Utah ski resort into work for a wider clientele - including banks. Page 14

TECHNOLOGY:

FIRST INTERSTATE Bancorp is testing a centralized customer information system expected to improve efficiency in its commercial business. Page 15

PROCESS reengineering can put the banking industry's house in order, Paul H. Allen writes in the second of two parts. Page 15

FINANCE:

A SMITH BARNEY analyst raised his rating on Federal National Mortgage Association stock, citing the secondary market agency's July operating results. Back page

TORONTO-DOMINION Bank's securities unit has won permission to underwrite and deal in debt and equity securities in this country. Page 22

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