The financial services industry is evolving at such speed that traditional lines of distinction between banking, brokering, and insuring are being lost - and so are many of the safeguards that were set in place after the depression of the 1930s.
The Reagan administration's deregulation of financial'services has stimulated this frenetic activity. It has meant more opportunities for investors, but it is also rapidly and radically restructuring the American economy.
A4O/Oo// mo/ etition becomes more intense, some critics feel, there is the possibility that one group will gain too much of the market, too much capital, and possibly too much influence over the lives of investors. Stock brokers and insurers, in particular, think Congress should impose a freeze on this deregulated activity and draw up a new set of rules for the financial industry. Federal Reserve chairman Paul A. Volcker has called for such a moratorium.
''We've had tremendous acceleration of this trend the past few years,'' says Edward O'Brien, president of the Securities Industries Association, the major trade group for brokerage houses. ''It's all come faster than anyone had a right to expect. We need a moratorium so that Congress can straighten out the mess.''
What brokers and insurers are most worried about is that banks will either circumvent or succeed in repealing the Glass-Steagall Act of 1933. This clearly separated banks from other businesses, barring banks from underwriting securities. If this and other laws are changed or eroded, securities and insurance spokesmen say, banks, with their special advantage of federally insured deposits, could grab a huge share of the securities market. They could become megabanks like their West German counterparts, involved in underwriting, corporate stock ownership, and making commercial business loans. Such multiple activities scmetimes involve various conflicts of interest.
Critics of banks also worry that if banks are able to underwrite securities, there could be abuses in which poor securities are dumped into the portfolios of bank customers.
Bankers, on the other hand, insist that at present their hands are unfairly tied. Brokerage and insurance houses are, in effect, becoming more and more like banks, stealing away bank customers, while banks must stay out of the brokerage and insurance businesses. The banks oppose a congressional moratorium on what Treasury Secretary Donald Regan last month described as ''a hodgepodge of regulation and a hodgepodge of activities.''
The bankers argue that a moratorium would simply lead to further congressional procrastination. What they seek, instead, is quick congressional action on a Reagan administration bill that would essentially free bank subsidiaries to underwrite municipal bonds, sponsor and manage mutual funds, underwrite and sell insurance, and develop and own real estate.
''The basic issues that need to be addressed have been around a number of years,'' says Fritz Elmendorf of the American Bankers Association. ''A moratorium couldn't ever be broad enough to encompass all financial activity. The marketplace is genius enough to find ways around it.''
So far, Elmendorf charges, ''most incursions have been by securities firms into banking turf.'' He says the banks are willing to risk further moves by insurance and securities firms into their market. William Martin, general counsel for the American Insurance Association, sees a moratorium on deregulation as a way ''of giving Congress a breather so it can devise a way of strengthening the separation between banking and commerce.'' Bankers (and even some brokers) say a moratorium on deregulation would be almost impossible to enforce and would have to be so far-reaching that it would ultimately be seen as a threat to free enterprise.
As it is, the marketplace is already doing a pretty clever job of finding its way around legal barriers. These are some of the methods being used:
* Brokerage houses are offering asset management accounts which many customers use as checking accounts. Some of the capital from these accounts is put into stocks or other investments. Brokerage houses have the advantage of being able to do this de facto banking on an interstate basis.
* Insurance firms, brokerage houses, banks, and other businesses can purchase small state-chartered banks, sell off the business loans, and offer federally insured deposit services (certificates of deposit, money market accounts, and mutual funds) and consumer loans across state lines. These become ''non-bank'' banks, not subject to regulation under the Bank Holding Company Act of 1956 because they do not fit the specifications of true banks.
* Banks and savings-and-loans are also acquiring discount brokerage firms that do not give investment advice but simply carry out transactions. BankAmerica, the country's largest bank, last year purchased the Charles Schwab & Co. discount-brokerage firm.
It seems that the larger the company the less concerned about competition it is. Securities insiders admit that the biggest brokerage and insurance houses are not as keen on a moratorium as are the midsized ones.
As it stands, this seems to be an interindustry dispute. Many consumers would see themselves as having a greater range of choices as a result of deregulation. Ralph Saul, chairman of the CIGNA insurance corporation and onetime president of the American Stock Exchange, recently told The Christian Science Monitor he thinks the deregulatory trend will continue until the government is forced by events to re-regulate.
''Ultimately,'' he said, ''I think it depends on the benefits to the consumer. If the benefits to the consumer in the minds of the executive branch and the Congress are most important, then the deregulatory trend will continue. But if customers or clients or policyholders are hurt - and hurt in sufficient fashion to feel that the rules of the game have to be changed - the rules will be changed. A lot of this will depend on the way in which financial institutions conduct themselves in this deregulated environment.''
* The stock market last week continued to track economic news closely, advancing and retreating on every blip of news about interest rates. The Dow Jones industrial average closed the week at 1,194.21, up 11.38.