Commercial banks have found so many ways around the 1934 Glass-Steagall Act, designed to keep bankers out of the securities industry, that the law is effectively dead, an authority on banking said yesterday.

"Commercial banks are now participating either directly or indirectly in almost every aspect of the securities market," George Kaufman, a professor of finance and economics at Loyola University of Chicago, told the Senate Banking Committee.

The committee held an oversight hearing on amending federal law to grant banks the right to underwrite mutual funds, mortgage-backed securities and municipal revenue bonds.

But Kaufman said banks have gotten into the securities field so heavily that Congress ought to change the law to make it official.

He cited a survey of large banks that showed that 70 percent offer some kind of mutual fund and that some have found legal ways to effectively underwrite them.

For example, Chase Manhattan Bank has developed a "market index investment" fund that in effect is a mutual fund based on the Standard & Poor's 500, he said.

"It is both too late and, I believe, technically impossible to put the genie back in the bottle and prohibit banks from offering a wide range of securities products," Kaufman said.

Kaufman said that in some of the newer investments such as mortgage-related securities, official bank entry could increase competition and allow banks in smaller cities to offer them.