House and Senate negotiators early this morning struck a deal with the White House that clears the way for final passage of groundbreaking legislation that would revamp laws, some dating back to the Depression, that have separated banks, securities firms and insurance companies.

Under the legislation, which Congress has tried to pass for two decades, financial institutions could more easily merge and sell everything from checking accounts to stocks, bonds and life insurance under one roof. House and Senate leaders and White House officials were unanimous in saying they believed they have reached a compromise on community lending, which has been the final issue holding up agreement on the bill. But all said they would have to see the final language of the bill before giving final approval.

To some extent, Congress is trying to catch up with changes already taking place, but lawmakers and the industry lobbyists have been pushing for the bill say it will remove regulatory shackles and make U.S. institutions more competitive in global markets.

But consumer groups have expressed dismay at the final compromise, saying privacy protections and other consumer provisions didn't go far enough in an age when huge electronic data banks have become a valuable commodity for marketers.

The accord unexpectedly came together at 1:30 a.m. after many lobbyists and lawmakers had feared that months of effort would again fall short because the White House and Senate banking Chairman Phil Gramm (R-Tex.) were unable to bridge differences over provisions concerning community lending. But then Gramm lost a key GOP vote -- Sen. Richard C. Shelby of Alabama -- over privacy issues, providing an opening for Democrats led by Sen. Christopher J. Dodd of Connecticut, home of many insurance companies, and Sen. Charles E. Schumer of New York, where Wall Street securities firms are based, to push for a final compromise.

The legislation is a compromise version of bills that earlier this year passed the House and Senate. The compromise bill will not become final until House and Senate negotiators sign off on it after seeing final language from this morning's agreement. The bill will then go to the full House and Senate for a final vote and to President Clinton's desk for signature.

Consumers are unlikely to see any immediate change in how they buy financial products, industry lobbyists said, because many of the changes the law would permit have already occurred as the industry over the years has deftly found ways around current law. But in the long run, they say, consumers will see lower prices on a better array of products that come to market more quickly than if the industry had to continue to find ways around the law.

"This is quite historic legislation," said Steve Bartlett, a former congressman who now heads the Financial Services Roundtable, which represents the nation's 100 largest financial institutions. "Consumers won't see a difference tomorrow morning, but they will see one."

Lobbyists from the well-heeled banking, securities and insurance industries have spent an untold number of hours and tens of millions of dollars pushing financial overhaul legislation, but until now were defeated by their own in-fighting, as each sought to enter the other's business while continuing to try to bar entry into their own.

The legislation finally gained momentum in recent years only after industry, frustrated by congressional inaction, resorted to lawsuits and changes in how federal regulators interpreted the law to win permission to invade on another's turf. The sale of financial services over the Internet has further hastened the view that laws from the 1930s and the 1950s intended to separate or limit the mixing of financial service products were not only artificial but outdated.

"We have become each other," said Mark Brickell, a managing director at J.P. Morgan & Co., the nation's fourth-largest bank. "There has been a convergence of our commercial activities and our political interests."

The merger of banking giant Citicorp and insurance and securities behemoth Travelers Group last year underscored how far Congress had lagged behind the marketplace. If the bill had not passed, the company now known as Citigroup would have been forced to shed its insurance interests next year.

"It's not a whole new world at the moment because a lot of this has been going on already," said Edward Yingling, chief lobbyist for the American Bankers Association, who has pushed for such legislation for 23 years. "It's not revolutionary now but it will be."

Yingling and others said costs will come down because companies won't have to hire so many lawyers to fight so many legal battles. And they won't have to bear the cost of convoluted corporate structures that are expensive to maintain but necessary to circumvent current law. For example, Chase Manhattan Corp., the nation's third-largest bank, has to maintain a bank headquartered in a town with fewer than 5,000 people to be able to sell insurance in other Chase banks around the country.

But not everyone's happy with the bill. Consumer groups and some lawmakers say the bill provides too few consumer privacy protections on personal financial information, and point out that affordable checking for the poor and other consumer provisions were expressly voted out of the bill.

"Industry has gotten a gold mine while the American public has gotten the shaft," said Sen. Richard H. Bryan (D-Nev.), who with Shelby and public interest groups on the right and left of the political spectrum, formed a coalition to protest what they see as the bill's inadequate privacy protections.

On privacy, the legislation 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 information to third parties, such as telemarketers. Among the exceptions would be one that permits banks to tell a check-printing company a customer's account number.

The bill would also 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.

In addition, the final legislation package includes an amendment sponsored by Sen. Paul S. Sarbanes (D-Md.) that would give state law precedence over federal law if the state gives consumers greater rights to control -- and to prevent -- the sale or sharing of personal financial data.

The provision could prove a big victory for consumer groups, who believe the federal package falls short of what customers need to control how their personal financial data is used by big business. They had wanted federal lawmakers to require companies to obtain permission from customers before being allowed to share private financial information with affiliate companies or with unaffiliated third parties.

Overall, the legislation would create financial holding companies that would be regulated by the Federal Reserve Board and that could own bank, security and insurance subsidiaries that could freely cross-sell products. The idea is to create a level playing field for the industry by tossing out laws that have, over time, given different industries different advantages over one another.

The new law would permit securities firms such as Merrill Lynch & Co. to convert to a holding company and, for the first time, to buy a major bank.

And for securities firms such as Merrill Lynch, which want to become global providers of a full array of financial products at the retail level, having the Fed as one of its chief regulators would give it a stronger calling card abroad, lobbyists say. Foreign governments have a high regard for the Fed and feel more comfortable having one U.S. regulator to go to if there is a problem. Bank holding companies, which have long been regulated by the Fed, have had that advantage over securities firms abroad for years.

Although bank holding companies have found loopholes that have permitted them for several years to buy securities firms, they would under the new law face far fewer restrictions on the size of the securities business they operate, either as a subsidiary of the bank or as an affiliate in a holding company structure.

Though the Fed would oversee financial holding company, the bill, with some exceptions, calls for activities within the holding company to be regulated by the federal or state agency with the most expertise in that business. The sale of stocks and bonds by banks would mostly be regulated by the Securities and Exchange Commission, for example. Checking accounts, lending and other traditional bank activities would be regulated at national banks by the Office of the Comptroller of the Currency, a unit of the Treasury Department.

In a new regulatory framework, however, Treasury and the Fed would share oversight of newly allowed bank subsidiaries known as merchant banks that could take limited ownership positions in non-banking companies. Banks would be allowed to create merchant bank subsidiaries in five years if the Treasury and Fed can agree on regulations governing them.