Less than 24 hours after a humiliating defeat on credit union legislation in the House, banking industry leaders refused to back off long-standing demands during a Senate Banking Committee hearing.

"We believe a line must be drawn which places effective limits on the taxpayer subsidy, and imposes meaningful common bond requirements, safety and soundness regulation, and community investment responsibilities" on credit unions, said R. Scott Jones, chairman and chief executive officer of Goodhue County National Bank, Red Wing, Minn. "Practically speaking, H.R. 1151 does none of these things."

H.R. 1151 is the credit union bill approved Wednesday in the House by a resounding 411-to-8 vote. The measure would reverse a recent Supreme Court decision by allowing occupational-based credit unions to serve any company with fewer than 3,000 employees.

Senate Banking expects to mark up its own credit union bill the week of April 27, using the House bill as its starting point.

Michael S. Vadala, president and CEO of Summit Federal Credit Union, Rochester, N.Y., urged quick passage of legislation restoring the ability of credit unions to add new employer groups.

"Every day that Congress delays in resolving this issue, resources that should be spent or invested for the betterment of American consumers are instead squandered" in legal fees, said Mr. Vadala, who was representing the National Association of Federal Credit Unions.

"In the absence of prompt and decisive action by the Congress ratifying the long-standing federal policy permitting multiple-group fields of membership, there is a clear and present danger of seriously undermining consumers' confidence in that system."

Whether bankers can persuade the Senate to change the House bill remains to be seen. But the Senate on the whole is more sympathetic to bankers and it only takes one senator to stall legislation.

"I think the banks are right in not folding their cards right now," observed Bert Ely, a financial services consultant. "The Senate is more deliberative and Senate procedures give individual members a lot of power."

Karen Shaw Petrou, president of consulting firm ISD/Shaw Inc., was far less optimistic about the banks' game plan. "They are asking Republicans to do two things Republicans hate to do: tax people and impose government social policy mandates on them," Ms. Petrou said. "The strategy does not appear to be playing very well."

Certainly, the bankers are unlikely to receive much help from Senate Banking Committee Chairman Alfonse M. D'Amato. The New York Republican called the House vote "wonderful news" and said that "we in the Senate must now act to protect the right to join."

At the hearing, the committee's second in two weeks, banking industry representatives renewed their attack on large credit unions.

Mr. Jones, speaking on behalf of the American Bankers Association, said America First Credit Union is larger than all but three Utah banks, while IBM MidAmerica Employee Federal Credit Union is bigger than 98% of Minnesota banks.

K. Reid Pollard, president and CEO of Randolph Bank and Trust Co., Asheboro, N.C., added that the Senate should impose tougher community lending requirements on credit unions. Representing the Independent Bankers Association of America, Mr. Pollard called the House bill "a weak imitation" of the reinvestment required of banks.

America's Community Bankers chairman Cornelius D. Mahoney said the House bill's 3000-employee cap makes "the common bond requirement virtually meaningless.

In an interview before the hearing, ABA chief economist James Chessen said 99.9% of all American businesses employ fewer than 3,000 people.

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