The credit union industry has never lacked for political muscle. Nonprofit institutions that serve people rather than investors, they are so beloved on Capitol Hill that they win most legislative battles without breaking a sweat, especially when they are pitted against banks.

But with the Credit Union National Association beginning its annual convention Monday in Dallas, there is some reason to believe that banks are at last positioned to make some headway, particularly on the issue of revoking credit unions' tax exempt status.

First, even the credit unions acknowledge they have stumbled this year. Their biggest mistake may have been reneging on a commitment to Senate Banking Committee Chairman Alfonse M. D'Amato.

Reacting to the failure of Capitol Corporate Credit Union, Sen. D'Amato introduced reform legislation this year. The CUNA concluded that the bill was about as moderate a piece of legislation as it could have hoped for and endorsed it.

The CUNA's members saw things differently and forced the trade group to reverse its position. That's not the way to treat a powerful senator, particularly one who has always been an ally.

"It really didn't help us," said Charles O. Zuver, the CUNA's top lobbyist, in what is surely one of the year's grand understatements.

Sen. D'Amato "has always been a friend of the industry," Mr. Zuver added. But he may "have second thoughts about running out to help us now."

As it happens, Sen. D'Amato also sits on the Senate Finance Committee, which has jurisdiction over tax legislation. That means the New York Republican influences every major legislative issue affecting credit unions, from their tax exemption to laws affecting fields of membership.

Off Capitol Hill, the credit unions' problems run deeper. Bankers are confident that an appeals court is ready to side with them on a case that raises questions about how far a credit union can go in expanding its field of membership.

In recent years, bankers have complained that the National Credit Union Administration has stretched the common-bond doctrine to allow individual institutions to recruit virtually anyone this side of heaven. An adverse decision could slow the industry's growth.

What could finally turn the tide, however, is the likelihood that the banking industry will finally settle the big issues that dominate its agenda now - Glass-Steagall, regulatory relief, and funding for the thrift bailout - and turn its full attention to the credit unions.

"Soon, the credit union issue will become a top priority for us," vowed Edward L. Yingling, chief lobbyist for the American Bankers Association.

When it does, Mr. Yingling plans to pick his fights carefully. He notes there is a split in the credit union industry, between large institutions and small ones, and adds that the ABA has no beef with the so-called mom and pop shops.

Instead, Mr. Yingling has his sights trained on the large, multi-billion institutions that he says are indistinguishable from commercial banks and which do not now pay taxes.

The ABA has shown itself to be effective in the past on issues that once seemed hopeless, including regulatory relief. Challenging the credit unions is even more of a long shot. But at least it's no longer hopeless.

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