A new tack for banks?

THE United States Treasury Department has let it be known that it now favors the creation of five or 10 ``megabanks'' to compete with foreign banks, even if major changes in US banking laws are necessary to do this. Over the past 30 years Japanese, French, British, and West German banks have pushed US banks out of the top ranks. Citicorp and BankAmerica are the only US banking companies in the top 25 worldwide today.

The Treasury Department's concern is that US banks are undercapitalized. Tearing down the barriers between commercial banking and underwriting, and permitting industrial companies to own banks, are two proposed ways of remedying the situation.

But such changes in US bank laws - which would bring American institutions more in line with their counterparts abroad - will not come easily.

Distrust of powerful banking interests has a long history in the United States, and ghosts of the Great Depression of the 1930s still stalk the nation's legislative halls whenever banking laws are up for revision.

Despite much-publicized bank failures, however, and concerns that bank assets are largely concentrated within certain major institutions, the US does still have more than 14,000 banks, and more banks today than a few years ago. Probably far more banks, in fact, than it really needs. All to the good, say many Americans, worried not only about the banking industry but a general tendency to mergers that either crimp competition or make for very odd corporate bedfellows indeed.

No specific legislation is yet in the works to put into law the Treasury Department's new ideas. Alan Greenspan, newly nominated chairman of the Federal Reserve Board, is known to favor bank deregulation, which might explain why the Treasury is putting out the word on its new thinking just now. But Greenspan is not discussing the issue before his confirmation hearings.

The US does need bank-law reform. But administration assertions about bank capitalization are open to dispute. Many foreign ``megabanks'' are the result of much closer business-government ties than would be acceptable in the US. The public will have to decide what it really wants from its banks, whether bigger really is better, and whether massive changes in its business tradition and culture are an acceptable price to pay for better representation in the roll of the top 25 banks.