Alan Greenspan is a very smart and a dedicated public servant, and his performance as chairman of the Federal Reserve Board has been magnificent. When someone whose intelligence and dedication are beyond question argues positions that make no sense, I suspect a hidden agenda.

In the debate about operating subsidiaries, Mr. Greenspan wants Congress to require that newly authorized banking activities be conducted in holding company affiliates, not in banks' direct operating subsidiaries.

Mr. Greenspan contends that banks are subsidized by the federal safety net, that is, deposit insurance and the Fed discount window. He urges that the new activities be confined to holding company affiliates to prevent "leakage" of the subsidy from banks to their subsidiaries.

His argument is devoid of merit. The Federal Deposit Insurance Corp. holds about $35 billion of Treasury bonds, courtesy of the banks. The Fed rakes in billions a year from the banks.

Any subsidy clearly runs from the banks to the government, not the other way. Even if there were a subsidy, it's not any more likely to "leak" from the bank to an operating subsidiary than to a holding company affiliate.

Mr. Greenspan also contends, on occasion, that holding company affiliates offer better protection to banks. In reality, the opposite is true. The current and three prior chairmen of the FDIC have urged, because of safety and soundness considerations, that the new activities be allowed in bank subsidiaries.

If a holding company affiliate succeeds, the holding company, not the bank, reaps the profits. But if the venture flops, the bank suffers. Heads, the holding company wins; tails, the bank loses. Moreover, should the bank fail, a holding company affiliate, unlike a bank subsidiary, would not be available for the FDIC to sell to mitigate its losses.

So why is Chairman Greenspan arguing so strenuously for the holding company format? Speculating on another person's motives is hazardous, but some possibilities occur to me.

One possibility is that it's all about regulatory turf. The Fed regulates all holding companies but only some banks. To the extent that activities are conducted in holding companies, the Fed's turf is expanded.

The problem with that conclusion is that it gives Mr. Greenspan little credit for putting the public interest above his agency's parochial interest. That doesn't square with his many years of public service.

A second possibility is that Mr. Greenspan dislikes the safety net but can't find a practical way to get rid of it. Forcing new activities into holding companies would cause banks to continue their long slide into irrelevancy, thereby indirectly curtailing the safety net. Banks' share of the financial marketplace has already fallen from about 40% to about 20% in the past 20 years.

A third possibility is that the chairman believes it's important to maintain the Fed's power over banks. When, for example, it comes time to organize a rescue package, the chairman wants the CEOs of major banks to heed the Fed's entreaties. That's much more likely to happen if the Fed maintains or enhances its regulatory clout.

If Mr. Greenspan's real agenda is curtailing the safety net, I'm sympathetic to his cause, but I disagree with his tactics. If his real agenda is maintaining the Fed's ability to force banks to do as they are told, I disagree with both his cause and his tactics.

Bank operating subsidiaries are not the issue; the existence and scope of the safety net are what we should be debating. Holding company affiliates are not the issue; the appropriateness of concentrating ever more power in the hands of unelected officials is what we should be debating.

It's time to get the real issues on the table for an open and honest discussion. What we've been debating thus far makes no sense.

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