Unveiling the Clinton administration's position on financial reform Wednesday, Treasury Secretary Robert E. Rubin dodged the diciest issue: whether banks should be able to buy nonfinancial companies.

"Because of the broad-ranging and fundamental nature of the issues and the complete lack of consensus, we think the issue needs to be further debated by Congress," Mr. Rubin told a gathering of financial lobbyists.

But the long-awaited Treasury Department plan does advocate wide-ranging reform of current laws. In a speech to the Exchequer Club here, Mr. Rubin predicted increased competition among banks, securities firms, and insurance companies could save consumers up to $15 billion a year.

Well-capitalized banks would be allowed to enter all financial businesses, including securities, insurance, merchant banking, investment advice, and mutual fund sponsorship. The new activities could be conducted in a subsidiary of the bank or a holding company.

Securities and insurance firms could buy banks, but would be regulated by the Federal Reserve Board. To make the plan more palatable, the Treasury would streamline Fed oversight.

Any company could charter a wholesale, uninsured financial institution, or "woofie." These state or national banks could take deposits larger than $100,000, make loans, and would have access to the payments system. However, woofies would have to comply with the Community Reinvestment Act.

Facing tough opposition from Democratic lawmakers, Mr. Rubin straddled the banking and commerce issue by offering Congress two options.

Under the Treasury's first scenario, banking companies could own a "modest basket" of nonfinancial activities. While the Treasury did not quantify "modest," lawmakers have proposed letting banks earn 25% of gross domestic revenues from commercial businesses.

Trying to quell criticism that cross-industry mergers would lead to powerful conglomerates, the Treasury proposed barring affiliations between a bank holding company and any of the 1,000 largest nonfinancial companies.

Under this option, the thrift charter would be eliminated in two years and the Office of Thrift Supervision would be merged into the Office of the Comptroller of the Currency. Existing unitary thrift holding companies would be grandfathered.

Treasury's other alternative: leave things as they are. Banking and commerce would remain separate, the thrift charter and unitary holding companies would be retained, and the regulatory agencies would not combine.

"I'm not arguing for either side," Mr. Rubin said. "But I believe that for all sorts of reasons-substantial and political-the time has come for financial reform."

Reaction on Capitol Hill was mixed.

"Their recommendation is tantamount to surrender," said Rep. Bruce Vento, D-Minn. "Treasury has chosen just to report and reinforce the stalemate rather than risk political capital to see modernization law written."

But Rep. John J. LaFalce, R-N.Y., called the Treasury plan "a critical step forward," and House Banking Committee Chairman Jim Leach agreed. "While differences of judgment on several key legislative points remain, Secretary Rubin's statement today is very constructive to the process," the Iowa Republican said.

Rep. Leach said House Banking will vote on financial reform by mid-June. Mr. Rubin is scheduled to testify June 3 and will provide detailed legislative language explaining the Treasury's plan then.

The Senate is not expected to take up the issue until after the House votes. Senate Banking Committee Chairman Alfonse M. D'Amato insisted months ago that without strong leadership from the administration, financial reform would not pass. Yet, on Wednesday the New York Republican took a much milder tack.

"I look forward to working with the administration to develop progressive financial modernization legislation," Sen. D'Amato said in a statement.

Industry sources who favor reform were relieved that the Treasury's blueprint is finally on the table.

"It's important because it moves the process forward," said Steve Judge, a Securities Industry Association lobbyist. "But it's a real long way from what we want."

"We're pleased Treasury is on the field," said David J. Pratt, a lobbyist with the American Insurance Association. "It's a good framework. We've still got questions like everyone else."

Mr. Pratt said insurers want more details on how bank holding company supervision will be changed.

Edward L. Yingling, chief lobbyist for the American Bankers Association, questioned the Treasury's decision to give Congress two choices.

"The danger with two options is you harden the positions of both camps," he said. Giving financial reform a 50/50 chance of passing this year, he said the banking industry will insist any bill merge the banking and thrift charters.

Paul A. Schosberg, president of America's Community Bankers, said thrifts are disappointed the Treasury took such a timid approach. Sticking with the status quo, he said, is better than half-hearted reform.

More than 20 groups signed a statement blasting any mixing of banking and commerce.

"Permitting commercial banks to merger with commercial firms would be bad public policy and steer our nation down a perilous economic course," the coalition of small business, community banks, and farm groups said.

John A. Cox Jr., a lobbyist with the National Tooling and Machining Association, said his members are worried financial reform will lead to less credit for small companies.

"How large do you get before you stop making $50,000 to $100,000 loans in small communities?" asked Larry W. Mitchell, a lobbyist for the National Farmers Union.

"The basket recommendation remains on the table and our coalition will continue to fight," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America.

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