BOCA RATON, FLA., NOV. 30 -- Top Bush administration officials today called for the creation of a nationwide banking system as well as competition between commercial banks and securities houses, saying the time has come to dismantle restrictive regulations that have underpinned the banking system for the past half century.

In the latest of a series of increasingly explicit speeches about a financial reform plan that will be unveiled in January, Treasury Secretary Nicholas F. Brady and Securities and Exchange Commission Chairman Richard C. Breeden urged an end to barriers contained in two landmark pieces of legislation, the Glass-Steagall Act and the McFadden-Douglas Act. Both were passed during the Great Depression to restore confidence in the nation's banks.

Brady also asserted that the depleted Bank Insurance Fund, which insures commercial banks, would be shored up, if necessary, by tapping banking industry resources "without imposing a burden on the taxpayer."

Brady, who spent much of his career on Wall Street, told members of the Securities Industry Association (SIA) at a meeting in Boca Raton, Fla., that it was time to tear down the barriers between banks and brokers and create "a level playing field, favoring neither side." Under current law, banks cannot deal in stocks and securities houses cannot own banks.

Saying that the financial services industry "has become one market," Brady added, "Securities firms and banks should be free to affiliate if they choose to do so."

Brady's ideas won the support of Breeden, who also spoke to the SIA and called for the "reduction of arbitrary barriers" to the activities of banks and brokerage firms.

Breeden also went one step furthur, suggesting that U.S. corporations, which are now permitted to own securities firms, also be allowed to own banks.

Such a proposal would permit industrial concerns, such as General Electric Co. and General Motors Corp., to expand their financial activities.

Offering a glimpse of another idea that will be part of his plan, Brady called for full interstate banking. "We are the only modern country that does not permit national banking," he said.

The administration's gradual move toward financial reform has been spurred by growing problems in the financial industry, and by the erosion of barriers distinguishing different types of financial firms.

The savings and loan industry cleanup, which could cost taxpayers as much as $500 billion, led to an examination of federal deposit insurance by the Treasury. Critics of the cleanup contend that the safety net of deposit insurance allowed the S&Ls to take undue risks, leading to huge losses.

The Treasury has concluded that changes in deposit insurance must be linked to broader financial reform. Brady said his primary goal, in redrawing the powers of banks, would be to cut off deposit insurance from bank activities in the securities area.

If brokers can conduct their business without insurance, so can banks if they want to open brokage subsidiaries, he said.

Another catalyst for reform has been growing concern over the health of the nation's commercial banks, which have been hit by a combination of increased competition, bad loans and the slump in the real estate market.

In addition, the need for capital at an investment bank, CS First Boston Inc., already has prompted regulators to bend a traditional restriction. First Boston, which had lost money on loans for leveraged buyouts, had to turn to Credit Suisse for new capital, giving the Swiss bank a majority stake in the securities firm. Under current law, an American bank is barred from making such an acquisition, although regulators recently gave Morgan Bank permission to engage in certain activities normally reserved for investment banks.

Barriers to nationwide banking also have been eroded by the search for investors to take over ailing savings and loans. The government has permitted some commercial banks to expand beyond their traditional geographic boundaries.

Despite these developments, many in the financial industry are expected to give a cool reception to a proposed overhaul of banking regulation. Brady's call for breaking down industry barriers was greeted with skepticism by outgoing SIA Chairman Robert N. Downey, who blamed the "cancerous growth of federal deposit insurance" for the thrift crisis. In any modernization of financial services, Downey said, "the first rule must be that commercial banking organizations do not get a license to play with federally insured funds the way thrifts did."

In Washington, Diane Casey, executive director of the Independent Bankers Association of America, said that permitting the biggest commercial banks to open branches nationwide would threaten her group's 6,300 members, who have an average of $45 million in assets. "This ... strikes at the community banking heart," she said. "We will not let it go without fighting with every bit we have."

Former senator William Proxmire, interviewed in Washington, also raised concern about abolishing geographic restrictions on commercial banks. "One reason our small businesses are strong is that our community banks are less likely to take money out of their communities and invest in big cities and overseas," he said.

But Proxmire applauded the proposal to eliminate restrictions barring banks and securities houses from entering each other's businesses. Proxmire had proposed such legislation in 1988 and it passed the Senate by a 92-2 vote. However, the measure was blocked in committee in the House by Rep. John Dingell (D-Mich.).

Mufson reported from Washington and Hinden from Boca Raton.