After a decade and a half of trying, the financial industry ushered through the U.S. Congress and secured President Clinton's signature on a far-reaching financial deregulation bill in November.

The Financial Services Modernization Act's centerpiece is the repeal of the revered Glass-Steagall Act, which bars the common ownership of banks on the one hand, and insurance companies and securities firms on the other.

The legislation has repeatedly failed to make it through Congress in years past because of a maze of intra-industry disputes, turf fights between different parts of the federal regulatory structure, and the concerted efforts of consumer and community development advocates.

Another failure seemed possible or likely this fall, especially as Senate Banking Chair Phil Gramm, R-Texas, refused to compromise on privacy and community development issues.

Another failure, however, was not acceptable to one company above all -- Citigroup. The product of the merger between Citibank and Travelers, Citigroup is operating in apparent violation of the bar on common ownership of banking, and insurance and securities, thanks to a loophole that provides for a two-year transition period.

Enter Robert Rubin. According to a report in the New York Times, Rubin helped broker the final compromise language on financial deregulation.

And while he was brokering a deal between Congress and the White House, he was also, according to the New York Times account, negotiating his own deal with Citigroup. A few days after the banking deal was finalized, Citigroup announced it was hiring Rubin as a de facto co-chair of the corporation.

The bill for which Rubin served as midwife will remake the finance industry. While the industry touts the benefits of one-stop financial service shopping -- Senator Phil Gramm, R-Texas, the chair of the Senate Banking Committee, reprised the standard refrain in saying, "The hallmark of the bill is that it will make an array of financial services available to every American consumer that will provide lower prices and one-stop shopping at financial supermarkets in every city and town in the country" -- consumer and community development groups strongly opposed the bill.

The bill will:

• Pave the way for a new round of record-shattering financial industry mergers, as banks, insurance companies and securities firms line up to take their marriage vows.

• Leave financial regulatory authority spread among a half dozen federal and 50 state agencies, all uncoordinated.

• Pose the risk of too-big-to-fail institutions that may someday drain the public treasury as taxpayers bail out imperiled financial giants in order to protect the stability of the nation's banking system.

  "The powers of the new entities forming the conglomerates place massive stress on the regulatory system, and create a universe of too-big-to-be-allowed-to-fail corporations which will be candidates for future taxpayer bailouts," warns consumer advocate Ralph Nader.

• Permit mutual insurance funds to switch domicile states -- thereby enabling them to locate in states where they can convert to for-profit, stockholder companies without fully reimbursing mutual policyholders (a conversion of tens of billions of dollars).

These structural issues were not highlighted in the debate over the bill, however. Consumer and community groups did succeed in making privacy and community reinvestment high-profile issues that slowed the bill's passage -- though they ultimately lost their major battles to protect consumer privacy rights and to defend existing law obligating banks to lend in low- and middle-income communities.

The deregulation bill will permit the new financial giants to share finance, health, consumer and other personal information among affiliates.

"We asked for privacy protections, because we know that while there are tremendous new opportunities for innovation, there is also a dark side to cyber-finance," says Representative Ed Markey, D-Massachusetts.

"And some institutions are clearly tempted by the dark side and are moving from being 'privacy keepers' to being 'information reapers.' And if a family doesn't want all the brokers and insurance agents to be able to rifle through their checks and their credit card exchanges, or have their bankers pour through their brokerage records or insurance medical examinations, they should be able to say no." Under the final bill, consumers cannot stop such information-sharing within a financial conglomerate.

An effort by Markey and Senator Richard Shelby, R-Alabama, to provide consumers with the option of blocking personal information-trading was defeated.

The deregulation bill will also significantly weaken the Community Reinvestment Act (CRA), a law that requires banks to make loans in minority and lower-income communities in which they do business. Under the bill, there will be no ongoing sanctions against holding company banks that fail to meet CRA standards, the number of CRA examinations will be reduced, and provisions of the bill will discourage community groups from challenging banks' CRA records.

"The diluted CRA exam time frame means less accountability and fewer loans for Native Americans, small farmers and other low- and moderate-income people in rural America," says Hubert Van Tol, a board member of the National Community Reinvestment Coalition, an association of 700 community groups.

In negotiating a final deal, Members of Congress "caved to virtually every demand put forth by the banking, securities and insurance corporations and gave the back of the hand to efforts to preserve the Community Reinvestment Act in this new go-go world of trillion dollar financial conglomerates," says Nader.

� Robert Weissman