WASHINGTON

A government study slated for release today concludes that expanding FHA mortgage insurance limits would increase defaults and do little to help more families afford homes. Page 2

REGIONAL

To attract customers who are unhappy with the rush of bank mergers, Sanwa Bank California is offering certain banking services free of charge for the next three years. Page 4

CORPORATE FINANCE

Merrill Lynch's global loan department hired three executives as the company looks to bolster its presence in Latin America and the realty lending sector. Page 6

MORTGAGES

Default rates are high in the subprime mortgage arena, but contrary to what many expected as the market took off, that is no reason to resort to hardball collection tactics, said speakers at an industry forum. Page 8

DIGITAL FRONTIERS

ON-LINE BANKING: Judging from comments at the Bank Administration Institute's direct banking conference in San Diego, Internet banking is no longer viewed as just another option. And banks are in the pole position when it comes to allaying customers' fears about the lack of security and privacy that have hindered increased usage of on-line services. Page 21

INVESTMENT PRODUCTS

U.S. Bancorp significantly bolstered its position in investment products by buying Piper Jaffray and its broker-dealer last week. Page 11

CARDS

the U.S. Treasury's Financial Management Service and Mellon Network Services won an award for a biometric smart card project at Fort Sill, Okla. Page 14

TECHNOLOGY

A company that makes high-powered analytical software for financial institutions got a vote of confidence from Intuit, which licensed its software and took a 10% equity stake. Page 23

MARKETS

Mellon shares shot up 4.8% on rumors that Chase was about to make a "white knight" bid for the Pittsburgh banking company. Back page

COMMUNITY Page 12

WEEKLY REPORT: INTERNATIONAL

Asia cannot solve its economic crisis without meaningful reform and stringent supervision of local financial systems, say senior U.S. bankers and regulators. Page 20

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