Treasury Under Secretary John D. Hawke Jr. briefs Capitol Hill staff members today on the department's long-overdue report on financial modernization.

The report is being written by Robert E. Litan, director of economic studies for the Brookings Institution.

"We are taking a broad look at the future of financial services into the next decade and beyond," Mr. Litan said. "We're attempting to forecast trends and what the appropriate regulatory and policy responses will be."

The report, required by the Riegle-Neal Interstate Banking and Branching Act of 1994, was due a year ago. Congressional aides said the Treasury Department now expects to finish it in January.

Sources said the department buried an earlier version of the report because it recommended reductions in consumer protection rules. That version, written by Stanley Silverberg, a consultant and former research director for the Federal Deposit Insurance Corp., was completed in January 1995.

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Congress should let banks add new financial services, but commercial businesses should remain off-limits, said First Union Corp. president Anthony P. Terracciano.

Speaking in Washington last week, Mr. Terracciano said banks should be able to underwrite securities directly.

"I have no sympathy for the argument that by going into investment banking, banks are taking on more risk," he said.

Lending is much more precarious, Mr. Terracciano said. "You give money today and you have to get it back tomorrow - that's very risky stuff."

Still, he said, banks shouldn't be allowed to venture too far. "I've got difficulty with a bank owning a commercial company. I don't know anything about making cars."

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Grass-roots lobbying doesn't play well in the federal courts. That is the lesson the credit union industry learned last week from U.S. District Judge Thomas P. Jackson, who was clearly annoyed by a letter writing campaign by supporters of occupation-based credit unions.

Judge Jackson said at a Dec. 4 hearing that he had received more than 250 form letters blasting banks. "They continue to come in in handfuls every day," the judge griped, adding that he found the campaign inappropriate.

Credit union lawyers tried to appear contrite, telling the judge they have moved to kill the campaign. "We are not supporting this at all," Credit Union National Association lawyer Paul J. Lambert said of his trade group.

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Federal Reserve Board Governor Lawrence B. Lindsey is finding it harder to get a new credit card. Mr. Lindsey, whose application for a credit card was rejected last year, said on Dec. 5 that he is getting fewer preapproved cards in the mail. "It has gone down from 50 a day to a more reasonable number," he said.

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Beth L. Climo returns to the world of bank lobbying next Monday.

The American Bankers Association created a new post in its government relations department for Ms. Climo. As director for financial industry affairs, Ms. Climo will organize and run coalitions created to push industry priorities on Capitol Hill.

Ms. Climo, who directed legislative affairs at the Federal Deposit Insurance Corp. for four years, returned to her legal roots in 1991 as general counsel of the Federal Housing Finance Board. But when power changed hands at that agency, Ms. Climo started looking around for something else. She finally found it at the ABA.

It's her second spin through the trade group's government affairs shop. In the late 1970s, Ms. Climo was a regulatory and legislative counsel at the ABA.

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