A Senate committee took a first step yesterday toward further deregulating Maryland's lending industry, approving a bill that Gov. Harry Hughes' administration says goes "too far."

The bill, pushed by the Maryland Bankers Association, would allow variable interest rates on most consumer loans and permit an assortment of now-prohibited finance charges.

It would also allow annual membership fees on bank and retail credit cards, a provision that Hughes has endorsed in separate credit legislation submitted to the General Assembly last month.

Proponents of the bill that was passed easily yesterday, including leaders of the Senate, said General Assembly action last year to raise the ceiling on interest rates was not enough to put Maryland in a competitive financial situation with Virginia and Delaware, where the banking industry is now totally deregulated.

Four of Maryland's largest banks transferred their credit card operations to Delaware last year to take advantage of that state's less stringent lending laws. The move cost Maryland about 1,000 jobs.

Maryland attorney general Stephen H. Sachs argued that the bill approved yesterday does away with key consumer protections.

The governor's version of the bill, Sachs has argued, would allow financial institutions to be more competitive without losing consumer protections.

The governor's bill, which allows some variable interest rates as well as credit card membership fees, has not been given a formal hearing in either the House or Senate.

And despite a fierce debate last year over banking legislation, the vote yesterday in the Senate economic affairs committee is expected to pave the way for quick approval by the full Senate next week.

Supporters of Hughes' legislation are hoping that the House of Delegates, traditionally more skeptical of banking legislation, will reject portions of the Senate bill that do not address the problem of consumer protections.