A council of regulators would referee industry disputes under two leading financial reform bills, and the Treasury Department appears likely to pick up on the idea.

The panel would make the close calls on which agency would regulate a new financial product. Also, if Congress lets bank owners invest in nonfinancial businesses, the council would determine what activities count toward that portfolio of commercial activities.

Treasury's idea, expected to be included in its long-awaited financial reform plan, is modeled after provisions backed by Senate Banking Committee Chairman Alfonse M. D'Amato, R-N.Y., and Rep. Marge Roukema, R-N.J. Their plans aim to settle arguments that have stalled past attempts at reform by setting up a National Financial Services Council to oversee diversified financial holding companies.

The panel would include officials from Treasury, the four banking agencies, the Securities and Exchange Commission, and a state insurance commissioner.

In recent weeks Treasury Under Secretary John D. Hawke Jr. has met with regulators and industry trade groups, seeking input on how the council should operate.

Mr. Hawke emphasized in an interview, however, that no decision has been made on whether to include the council in the administration's financial reform plan, which is already three weeks late. The plan is expected to endorse a limited blending of banking and commerce.

Though Treasury hopes to release its reform recommendations soon, industry lobbyists said important parts of the plan are unresolved.

For instance, Treasury hasn't decided whether the Federal Reserve Board should be the lead regulator if banking is only a small portion of a holding company's operation.

Treasury officials also have not decided whether to overrule the Office of the Comptroller of the Currency on the insurance powers of national banks, an area where the agency now has nearly complete authority.

Insurance trade groups are desperate to roll back several Supreme Court decisions that have given the Comptroller's Office authority to preempt state insurance laws that discriminate against banks. But banking trade groups fear that the multiregulator council would usurp the comptroller's power to veto state laws.

"We will have difficulty with the council if there's an effort to eliminate the ability of banks to appeal to the comptroller against discriminatory (state) regulation," said Ken Reynolds, executive director of the Association of Banks-in-Insurance, which represents 218 banks that sell insurance.

Edward L. Yingling, chief lobbyist for the American Bankers Association, agreed. The banking industry will resist any attempts to roll back the comptroller's power to overrule state insurance laws, he said.

"We want deference given to the bank regulator," he said.

Endorsements, on the other hand, come from groups representing insurance companies. "We generally look favorably on the idea as long as it gives insurance regulators a formal seat at the table," said Gary Hughes, general counsel for the American Council of Life Insurance.

"It's a good idea," said David J. Pratt, lobbyist for the American Insurance Association, which represents property and casualty insurers. "It would help address the problem of insurance commissioners being outgunned by federal regulators."

Banks and the insurance industry are also divided over whether the Fed should be a strong "umbrella" regulator of all companies that own banks. The ABA wants the central bank to remain as the top regulator of all bank owners, while the Securities Industry Association argues that loose holding company oversight by the council is sufficient.

Most securities companies are loath to submit to the Fed's historically strict oversight, despite recent assurances that the board would not intrude upon diversified financial firms.

"If you take away the need for an overall holding company regulator, we like the idea a lot," said Steve Judge, SIA's lead lobbyist. "If you have a place where coordinated action between regulators can take place, you can solve the concerns about holding company oversight."

The ABA, whose many big bank holding company members would be regulated by the Fed no matter what happens, doesn't see it that way.

"The securities and insurance companies would like to take holding company supervision from the Fed and give to the council wholly," Mr. Yingling said. "That's not likely to happen. The Fed should still have a significant role in regulating bank holding companies."

Rep. Roukema, who agrees the Fed should have a key position in holding company regulation, is redrafting her bill to boost the agency's supervision of diversified financial firms. Currently, her financial reform bill would not subject insurance or securities conglomerates to Fed oversight after they buy a bank unless they acquire a state-chartered member of the Fed.

"I've become convinced that we must have some umbrella regulator where the buck will stop," Rep. Roukema said. "I'm working on how to legitimately marry the council with an umbrella regulator."

ACLI's Mr. Hughes said he is willing to reserve judgment on plans to boost the Fed's role. "The board has expressed to us that they have no desire to substantively oversee the operation of a life insurance company," he said. "Nevertheless, we still want to know: Is one agency going to be the ultimate overseer?"

Robert A. Rusbuldt, lobbyist for the Independent Insurance Agents of America, said it is too early to say whether the council is a good idea. First, lawmakers must agree on how to regulate existing insurance and securities products, he said.

"You have to look at things in logical sequence," he said. "Some people are jumping over pieces of the puzzle."

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