House and Senate negotiators working on a proposed overhaul of decades-old banking law last night approved privacy provisions that would be acceptable to the White House.

There were signs that lawmakers would complete negotiations on a compromise bill late last night, until about 10 p.m., when Treasury Secretary Lawrence H. Summers appeared to meet privately with Sen. Phil Gramm (R-Tex.) to try to seek a compromise over provisions concerning the Community Reinvestment Act. The CRA requires banks to lend in underserved areas.

Gramm dislikes the CRA and has fought against expanding it in the new legislation. The White House has said it would veto any version that would weaken the CRA.

After meeting for two hours behind closed doors, Gramm, Summers and other key legislators adjourned the meeting without having reached a compromise. "There are profound differences of opinion," said House Banking Committee Chairman Jim Leach (R-Iowa), who attended the meeting. But he added, "We're very close to a breakthrough."

Summers's only comment was, "We've had discussions and we've agreed to have further discussions."

Reaching a solution on the CRA remains the last hurdle to be worked out before Congress can pass a final bill to send to the president.

After Gramm and Summers had met for more than an hour without resolving their differences, lawmakers trying to craft the bill decided to recess until this morning. The lawmakers are part of a conference committee trying to reconcile two versions of a banking-law overhaul that the House and Senate passed earlier this year.

Negotiators approved House language on the privacy issue, which would require financial institutions to craft privacy policies and to clearly spell out those policies to consumers. The bill also would allow consumers to block companies in most instances from sharing or selling financial information to third parties. One exception would permit a bank to tell a check-printing company a customer's account number.

The bill also would make it a crime for someone to use another person's name or other information to obtain checking-account and other financial data, a practice known as "pretext calling," except in cases involving child support.

And, in a possible big victory for consumers, lawmakers adopted an amendment sponsored by Sen. Paul S. Sarbanes (D-Md.) that would make state law preempt federal law if the state gave consumers more control over protecting their personal financial data.

The overall bill is intended to catch up to changes already taking place in the marketplace by making it easier for banks, insurance companies and securities firms to merge and sell financial products under one brand name. The bill would repeal law from the 1930s separating banking from most securities activities and a 1950s law that separates banking from most insurance activities.

Meanwhile, two of the nation's largest financial institutions--Fannie Mae of the District and Freddie Mac of McLean--appeared to be exempted from the consumer privacy protections included in the proposed legislation.

Lawmakers voted, after little discussion, to the exemption, which was offered in an amendment by Rep. Spencer Bachus (R-Ala.). Bachus described his amendment as having little effect on consumers because Fannie Mae and Freddie Mac, which are congressionally chartered companies that buy home loans from banks, are prohibited from buying loans directly from individual home buyers.

Bachus said that without the amendment, Fannie Mae and Freddie Mac might be subject to "regulatory burdens" that would require them to disclose their privacy policies to individual consumers whose mortgage they have purchased.

Fannie Mae and Freddie Mac have what the companies themselves describe as the largest bank of information on consumers' home-buying habits.

House Banking chairman Leach, who is also chairman of the conference committee, said he did not believe the amendment was needed. But it passed by voice vote, and several congressional aides expressed concern that the exemption might permit the two companies to sell information from their database with little knowledge by consumers.

The amendment was passed during a long discussion of exactly what privacy protections consumers should have in any bill to revamp banking.

David Jeffers, spokesman for Fannie Mae, said the company asked for the provision because it has no direct contact with consumers.

Jeffers said Fannie Mae does not share names, financial records or other personally identifiable information with anyone except the original lenders, and it was his understanding that they would be covered by the legislation if they tried to share the information.

"Absolutely not," Jeffers said when asked about whether Fannie Mae might share such information with marketers. "We have a strict policy."

Freddie Mac officials could not be reached for comment.

A Landmark Proposal

For two decades, lawmakers have struggled to pass legislation that would eliminate barriers that have made it difficult and costly for banks, securities firms and insurance companies to enter one another's businesses. But until this year, the House and Senate were unable to even pass similar legislation in the same year, let alone reach agreement on a compromise bill. Among other things, the measure now in the works would:

* Repeal the Banking Act of 1933 (Glass-Steagall), which separated commercial banks from investment banks.

* Knock down walls erected in the 1950s to separate banks and insurance companies.

* Share regulatory oversight between the Federal Reserve and the Treasury, in which the Fed would continue to regulate financial holding companies that own banks and the Treasury would continue to regulate nationally chartered banks. But the Fed and the Treasury would share oversight of new activities.

* Require financial institutions to craft privacy policies and to clearly spell out those policies to consumers. The bill also would allow consumers to block companies in most instances from sharing or selling financial information to third parties.