Treasury Secretary Donald Regan urged the Senate Banking Committee yesterday to swiftly pass the administration's bill authorizing bank holding companies to move into municipal bond underwriting, insurance, real estate development and other related financial activities. Failure to do so, he warned, would bring about chaos.

The legislation, which Regan said is the 101st version of a bill originally proposed last year, comes at a time of intense competition within the financial industry, deep division among federal regulators and little enthusiasm among legislators for any new bill.

Indeed, Sen. Donald Riegle (D-Mich.) asked Regan why the administration is pushing legislation before the vice president's task force on regulation of financial services presents its recommendations in September.

Regan, who is also vice chairman of that group, surprised Riegle and others in the packed chamber by responding that the task force is already working on the assumption that banks and thrift institutions would have these powers.

"The bill lays out the powers, and the task force will try to decide who will regulate whom after the institutions get these additional powers--or don't get them," said Regan.

The secretary said he was speaking with approval of Vice President George Bush, the task force chairman, and later added that the task group had not yet reached any conclusions on whether to combine some regulatory agencies.

Regan's remarks were the first public indication of the task force's thinking. The 13-member group, which includes all the financial regulators, as well as David Stockman, director of the Office of Management and Budget, and Martin Feldstein, chairman of the Council of Economic Advisers, is known to have internal disagreements over how the regulatory pie should be divided.

The administration opposes the idea of a moratorium on acquisition of financial-service firms because it would "remove all pressure for reform and likely be extended from year to year," said Regan.

He told the committee the bill has the support of some financial leaders but on further questioning admitted there is significant opposition from the securities and insurance industries, small banks and thrift institutions. Mutual savings and loan associations--about 77 percent of all S&Ls--complain the bill would curb their ability to expand.

Regan scoffed at opponents who claim giving banks additional powers would cause a repeat of the stock speculation that ended in a wave of bank failures during the Depression. On the contrary, he compared what is happening in the 1980s to another momentous change that took place a half century ago: the growth of supermarkets.

He warned that if Congress did not act, individual states would. He predicted a hodge-podge situation would occur in which banks would run from state to state seeking the best deal to maximize their profits.

When a committee member suggested that federal intervention could threaten the dual-banking system, Regan replied that the debate about who should regulate the banks was a continuing and unresolved one that first concerned his predecessor, Alexander Hamilton. Regan Urges Swift Passage Of Bank Bill By Nancy L. Ross Washington Post Staff Writer

Treasury Secretary Donald Regan urged the Senate Banking Committee yesterday to swiftly pass the administration's bill authorizing bank holding companies to move into municipal bond underwriting, insurance, real estate development and other related financial activities. Failure to do so, he warned, would bring about chaos.

The legislation, which Regan said is the 101st version of a bill originally proposed last year, comes at a time of intense competition within the financial industry, deep division among federal regulators and little enthusiasm among legislators for any new bill.

Indeed, Sen. Donald Riegle (D-Mich.) asked Regan why the administration is pushing legislation before the vice president's task force on regulation of financial services presents its recommendations in September.

Regan, who is also vice chairman of that group, surprised Riegle and others in the packed chamber by responding that the task force is already working on the assumption that banks and thrift institutions would have these powers.

"The bill lays out the powers, and the task force will try to decide who will regulate whom after the institutions get these additional powers--or don't get them," said Regan.

The secretary said he was speaking with approval of Vice President George Bush, the task force chairman, and later added that the task group had not yet reached any conclusions on whether to combine some regulatory agencies.

Regan's remarks were the first public indication of the task force's thinking. The 13-member group, which includes all the financial regulators, as well as David Stockman, director of the Office of Management and Budget, and Martin Feldstein, chairman of the Council of Economic Advisers, is known to have internal disagreements over how the regulatory pie should be divided.

The administration opposes the idea of a moratorium on acquisition of financial-service firms because it would "remove all pressure for reform and likely be extended from year to year," said Regan.

He told the committee the bill has the support of some financial leaders but on further questioning admitted there is significant opposition from the securities and insurance industries, small banks and thrift institutions. Mutual savings and loan associations--about 77 percent of all S&Ls--complain the bill would curb their ability to expand.

Regan scoffed at opponents who claim giving banks additional powers would cause a repeat of the stock speculation that ended in a wave of bank failures during the Depression. On the contrary, he compared what is happening in the 1980s to another momentous change that took place a half century ago: the growth of supermarkets.

He warned that if Congress did not act, individual states would. He predicted a hodge-podge situation would occur in which banks would run from state to state seeking the best deal to maximize their profits.

When a committee member suggested that federal intervention could threaten the dual-banking system, Regan replied that the debate about who should regulate the banks was a continuing and unresolved one that first concerned his predecessor, Alexander Hamilton.