NEW YORK -- The battle over regulatory consolidation heated up Thursday as the Clinton administration fired back at the Federal Reserve, pointedly criticizing and even ridiculing the central bank's arguments against a single agency.

If the current system of four bank regulatory agencies "is so good, then why not have four central banks to check on each other?" Treasury Secretary Lloyd Bentsen said during a session with a group of reporters here.

Asked if he had been surprised at the central bank's reaction to the administration's proposal to merge the bank and thrift regulatory agencies, the Treasury chief replied: "I am never surprised by people protesting the loss of turf."

Principal Antagonist

The Fed has emerged as the chief opponent of efforts by the administration and the chairmen of the House and Senate banking committees to merge the agency's regulatory functions into a single Federal Banking Commission.

A number of the central bank's governors have criticized the plan in speeches and, on Wednesday, Fed chairman Alan Greenspan published a lengthy article in the Wall Street Journal attacking the proposal.

Mr. Greenspan said the Fed needs hands-on involvement in bank supervision in order to conduct monetary policy and anticipate systematic problems in the financial system.

Downplays Supervisory Role

The Fed is expected to come out with its own consolidation plan soon, and its proposal will likely include a major role for the central bank in bank supervision.

Mr. Bentsen dismissed the notion that the Fed needs direct supervisory authority to conduct monetary policy or deal with crises.

The majority of the institutions the Fed now regulates are community banks, he said, adding: "It's hard to believe that the Fed's monetary policy rests on its ability to monitor those banks."

Moreover, he added, "The Fed has never regulated a railroad, but it dealt just fine with Penn Central. The Fed has never been a thrift regulator, but it successfully handled the Ohio thrift crisis."

Industry Concerns

The banking industry has been slow to take a position on the administration's proposal.

The American Bankers Association's government relations council discussed the issue at length last week, but postponed a decision, said Edward L. Yingling, the trade group's chief lobbyist.

"The big question is how to design a system that doesn't undermine the dual banking system," Mr. Yingling said. Although the administration proposal would not eliminate state charters, bankers are concerned that under a single agency, a national charter would come to dominate.

In addition, Mr. Yingling said, a single agency would remove incentives for efficient operations and low fees, since there would no longer be competition between agencies.

Likewise, Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America, said his organization was still studying the plan. But Mr. Guenther urged the two parties to compromise.

"It is important for the nation that Secretary Bentsen and Chairman Greenspan get together on regulatory restructuring," he said. "There is a lot of room for compromise between the present system of four regulators and the one regulator that Secretary Bentsen has proposed," he added.

Tough Road Ahead

Still, even a compromise proposal could face difficulties on Capitol Hill. The Bush administration cobbled a merger plan that attempted to satisfy the Fed and its proposal was dismissed. A task force of House Banking Committee members was then appointed to come up with a new plan, only to meet the same fate.

Mr. Bentsen made it clear that regulatory consolidation was the administration's top legislative priority for next year. At one point he said he does not intend to pursue interstate branching legislation until after consolidation has been settled.

That statement apparently pushes interstate one rung lower on the administration's scale of priorities.

When Mr. Bentsen endorsed branching earlier this year, he listed three other legislative issues he said must be dealt with first, but did not mention regulatory consolidation.

|Good Relationship'

Despite his pointed criticism of the central bank, Mr. Bentsen said relations between the administration and the Fed were not strained.

"I have a very good relationship with the Fed," he said. "Alan Greenspan and I have been friends for years. We have breakfast once a week, and we play singles tennis together."

Mr. Bentsen praised the Fed as one of the most credible institutions in Washington, but said the administration didn't need the central bank's support on regulatory consolidation. "I'd like to have it," he said. "I don't consider it essential."

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