In a move to head off consumer efforts to tighten financial privacy laws in cities and states around the country, the president of the largest banking lobby group today will urge financial executives to make privacy their top priority or risk losing customer trust.

"Privacy is the cornerstone of banking, the heart of our relationship with customers," Hjalma Johnson, president of the American Bankers Association, will say in a speech this morning at a gathering of bankers here, according to a copy of his remarks. "We have a real opportunity as an industry to demonstrate leadership on this issue and I believe we not only should, we must."

Johnson will challenge bankers to craft privacy policies and make them publicly available to consumers by April 10, which is at least six months before they would be required to do so under new privacy laws that are contained in recently enacted financial legislation.

Johnson's message comes just three days after President Clinton signed that legislation into law, making it easier for banks, securities firms and insurance companies to merge and cross sell a full range of financial products, from checking accounts to stocks and life insurance.

One of the most contentious issues while the bill was crafted was how much control a consumer should have over personal financial information. The financial services industry argued it needs to share customer information among securities firms, insurance companies and bank affiliates or else the advantage of merging in the first place becomes lost. Consumer groups argued that consumers should have a right to prevent financial information from being shared.

In the end, the Clinton administration agreed to provisions that required companies to create and publish privacy policies and allowed them to share customer information among affiliate firms. The law also gave consumers the option in many but not all cases to decline having their information shared with an outside, unaffiliated third party.

"We have earned our customers' trust. Let's work to keep it," Johnson will say in the speech.

Johnson and the ABA hope bankers will read between the lines and understand that by acting ahead of the law they may be able to preempt efforts to toughen privacy laws at the local and state levels, and even possibly in new federal legislation next year. The bill allows states to craft tougher financial privacy laws that override the federal mandates.

Bankers clearly want to avoid the kind of consumer backlash, for example, that led voters in San Francisco and Santa Monica, Calif., this fall, and in Iowa and Connecticut earlier, to limit ATM fees. Bankers know that as much as consumers object to those fees, they dislike abuses of privacy information even more.

Some California lawmakers already say they will push for tougher privacy laws, and the state is expected to be among the first places where local battles will take place over the control of personal data.

Bank regulators, too, understand the potential for consumer backlash. "Any company that ignores, or fails to understand, the tinderbox of public sentiment waiting to ignite on privacy acts at its peril," Julie Williams, chief counsel at the Office of the Comptroller of the Currency, which regulates nationally chartered banks, warned the industry in a speech last summer.

Consumers groups said they were unimpressed by the ABA president's speech or the organization's efforts to make sure banks comply early with the new law.

"If they implement every single provision in the bill relating to privacy you don't begin to meet the need for a better statute," said Jake Lewis, who watches banking issues for consumer activist Ralph Nadar. "It's nice to have a little announcement before they are going to invade your privacy, but they'll invade it nonetheless. Publishing the policy doesn't mean much if there's no remedy."

Shortly before signing the bill Friday, Clinton praised its privacy provisions, but said they nonetheless fall short of what he would have liked. He said he will push for tougher laws next year and has asked his staff for recommendations.