Sears, Roebuck is the rival. But the army can't get organized, because the soldiers all think the other guy should be the private. Financial institutions, crunched by the changing economy, are facing ever-stiffer competition from less regulated foes such as brokers Merrill Lynch and Bache. Sears, after swallowing up Dean Witter and Caldwell Bankers, is casting a covetous eye on the banking business.
Realizing the danger, banks and S&Ls are calling for help. Sweeping legislation, introduced by Sen. Jake Garn (R) of Utah, would cut many of the regulatory chains on depository institutions - but the bill has stalled while the intended beneficiaries squabble among themselves.
''I frankly have been rather disappointed with the testimony so far,'' Senator Garn said, concluding a round of hearings. ''The banks have come in and said, 'We support all those provisions that help us, but we're opposed to those that help the savings-and-loans.' And the thrifts have come in and said, 'Hey, we don't think the banks should have that additional authority, but we sure want the parts that are for us.'''
If the various industries can't reconcile their differences, they may lose the chance to gain new powers, while Sears marches in and captures some of their market share.
''There are some indications (that Senator Garn) may just say the heck with it all if nobody wants to play ball with him,'' a banking source says.
Mr. Garn's bulky bill would expand the services that could be offered by depository institutions, further blurring the lines between the words ''bank,'' ''thrift,'' and ''broker.'' Among the provisions:
* S&Ls would get some commercial banking powers. Garn's bill would allow thrifts to offer checking accounts and make commercial loans.
* Both banks and thrifts would be able to manage and sell mutual funds. Among other things, this would allow them to cash in on the rich money market funds.
* Banks would be allowed to underwrite municipal revenue bonds.
* Assumable mortgages would be struck down. Some states have laws that prohibit banks from enforcing due-on-sale provisions - a mortgage clause that prevents a new buyer from simply ''assuming'' the old mortgage. The Garn bill would preempt these state laws.
* A national bank could lend more money to a single borrower - 15 percent of capital and surplus, instead of 10 percent.
* The door would be opened for interstate thrifts. The Federal Savings and Loan Insurance Corporation would be authorized to approve interstate and cross-industry mergers for S&Ls - but only for certain ailing institutions.
* The door would be opened for interstate banking. The FDIC would be able to allow an interstate purchase of a closed bank, but, again, only if an in-state partner could not be found.
* State usury ceilings on consumer loans would be ruled out, though states would have three years to override this.
Garn's legislation also included two sub-bills: one, designed by the Federal Home Loan Bank Board, would make it easier to deal with problem thrifts; the second would collapse all federal deposit insurance agencies into the Federal Deposit Insurance Corporation. But Garn now says he won't push this FDIC consolidation.
The legislation has appeared at a time when financial officials all seem to have just finished reading ''Looking Out for Number One.'' S&L officers don't like the idea of a distressed thrift being bought by a bank. Brokers are peeved about the prospect of others infringing on their territory. Bankers think everybody else is a wimp, but complain that S&Ls shouldn't be able to make commercial loans.
Public progress on the bill has been suspended, while aides shuttle between Capitol Hill and the K Street lobbyist's corridor, trying to reconcile the different positions.
''We're attempting to build a consensus among competing groups,'' says a congressional staff member working on the bill. ''We think we're making some progress.''
Trade association officials agree - guardedly.
''We're talking about some very controversial things,'' says Fritz Elmendorf, a spokesman for the American Bankers Association. ''We're talking about some emotional issues.''
The White House supports the bill's general goals, but disagrees with some specifics: To wit, Treasury Secretary Donald Regan testified that thrifts should not yet be allowed to offer mutual funds. Banks wanting to offer mutual funds or municipal bonds should set up an affiliate to handle the operation, he suggested.
On the other hand, the powerful voice of Paul Volcker, chairman of the Federal Reserve Board, says banks shouldn't be able to sell money market funds at all. He opposes granting banking powers to S&Ls and think Congress should not strike down usury laws unless there is ''a clear national interest at stake.''
And while battle over the Garn bill goes on in the background, a new scapegoat has appeared: the Depository Institutions Deregulation Committee. The DIDC, established by the Monetary Control Act of 1980, is watching over the gradual deregulation of financial institutions' interest rates.
Unfortunately, the institutions being deregulated occasionally scream. On Sept. 22 the DIDC approved a half a percent rise in the passbook savings rate - but a turnaround by Secretary Regan put that decision on hold. Still in place, though, are rules completely unshackling IRA/Keogh accounts, and hard-pressed thrifts are crying ''foul.''
''If their actions of the past 18 months are a taste of what is to come, I hate to think what further damage the DIDC will do. . .'' says Edwin Brooks, vice-chairman of the US League of Savings Associations.