D.C. TO GET OVERSIGHT BOARD.(MAIN)

Byline: Associated Press WASHINGTON Hoping to avert an embarrassing bankruptcy in the nation's capital, President Clinton signed a bill Monday to set up an oversight board with broad powers over Mayor Marion Barry and the City Council.

The law also allows the District of Columbia to borrow hundreds of millions of dollars from the federal treasury to help pay its bills. It requires a balanced city budget in three years.

With Barry looking on, Clinton said the seat of the U.S. government known for high crime, potholes, slow trash pickup and deteriorating schools should be transformed into ``a city that works''

But leaders of both major …