Treasury Secretary Nicholas F. Brady indicated yesterday that the Bush administration is unlikely to reduce the $100,000 deposit insurance at banks and savings and loan institutions for fear of suggesting a lack of confidence in financial institutions.

But in testimony before the Senate Banking, Housing and Urban Affairs Committee, Brady said that the administration is considering limiting the amount of insurance to a maximum of $100,000 per person instead of allowing a person to have unlimited insurance by maintaining a number of accounts at different institutions, as is allowed under current law.

The testimony came as senators searched for hints of the administration's plans for overhauling the nation's system of deposit insurance. Under the thrift rescue legislation passed last year, the administration is required to look into reforming deposit insurance to reduce the risks of a debacle similar to the savings and loan crisis.

Deposit insurance is considered to have been a factor that encouraged some bank managers to take reckless risks.

The Treasury is expected to propose changes in deposit insurance and the regulation of financial institutions next year.

But the Treasury hasn't yet decided what its final recommendations will be.

Brady declined to offer firm opinions on specific recommendations before the Treasury study is finished at the end of the year, but he said, ''I can't see a rush to lower it {the insurance limit} at this particular time.''

Asked what he thought of limiting insurance to one account per person, he said, ''If you were going to start any place, that would be a place to start.'' Charging banks with risky portfolios more for deposit insurance is an idea ''we should look very closely at,'' he said.

While hedging his views on deposit insurance, Brady gave clear indication of his determination to remove barriers on the types of businesses banks can conduct. He said that the administration probably would propose allowing banks to sell other financial services such as insurance and corporate equities and permitting them to operate across state lines to help make them more competitive.

''I don't think we ought to take the thrift debacle and make it such a big factor in our minds that we don't face the issues in the banking industry,'' he told the committee.

The thrift industry was deregulated without requiring S&L owners to risk more of their own money, he said. Consequently, any expansion of bank powers ought to be linked to strong capital requirements, he said.

''We learned all too painfully from the thrift crisis that a crucial protection for the taxpayer is requiring firms to have a substantial amount of their own money at risk to absorb losses,'' he said.

''We will not propose changes to the financial services regulatory structure that would increase the taxpayers' exposure.''

Brady agreed with Sen. Donald W. Riegle (D-Mich.), chairman of the committee, and Sen. Jake Garn of Utah, the senior Republican on the panel, that Congress should overhaul the financial system next year.

''Retaining the status quo is not an attractive option,'' he said.

Banks are losing some of their best commercial business to securities firms, which underwrite short-term borrowing called commercial paper for major companies, he said.

At the same time, Brady said, banks have been hindered from freely expanding across state lines and fully entering such lucrative fields as insurance and securities. As a result, banks have had to concentrate their lending in riskier areas such as commercial real estate lending, energy and farm loans and leveraged buyout loans, he said.

Brady also warned that U.S. banks will find it difficult to compete overseas, as foreign banks are competing in the United States, unless they have broad powers akin to those granted European institutions.