WASHINGTON - Regulatory relief legislation is the banking industry's top priority, but the American Bankers Association is threatening to oppose the bill if amendments expanding credit union powers are included.

The credit union industry's two leading trade groups are trying to tack on provisions that would increase the industry's lending and depository powers and designate the National Credit Union Administration as the sole agency that writes regulations affecting credit unions.

"The ABA will vigorously oppose any effort to add such proposals to comprehensive regulatory burden relief legislation," said chief ABA lobbyist Edward L. Yingling in a letter to the bill's two Senate sponsors, Richard Shelby, R-Ala., and Connie Mack, R-Fla.

"Their addition to the legislation would likely result in the banking industry's opposition to the entire bill," he added.

The letter also was sent to three key House members: Rep. Doug Bereuter, sponsor of the House version of the bill; House Banking Committee Chairman Jim Leach, R-Iowa; and Rep. Marge Roukema, R-N.J., chairman of the House Banking subcommittee on financial institutions.

The proposals Mr. Yingling took issue with are not part of the Bereuter or Shelby-Mack bills, but were raised by representatives of the National Association of Federal Credit Unions and the Credit Union National Association at a hearing last month before the Roukema subcommittee. They are being pressed vigorously by industry lobbyists.

Ronald Ence, director of legislative affairs for the Independent Bankers Association of America, said his organization might withdraw support if the credit union industry gets its way.

"I suspect that's probably the case, but on the other hand we want this regulatory relief bill in the worst way," he said. "We have a window of opportunity here for significant regulatory relief, and I hope the overzealous efforts of some who want to make this a Christmas tree won't ruin that."

However, the credit union industry isn't backing down.

"I wonder how many bankers want to see an association they support with their dues dollars kill substantial regulatory relief over a few credit union provisions," said William J. Donovan, vice president for government affairs at the federal credit union group.

So far lawmakers haven't agreed to include any of the credit union proposals in their legislation, congressional aides said. But they are giving the politically powerful industry a hearing.

The industry wants to eliminate statutory loan maturity limitations, increase its real estate lending authority, and increase loan participation powers.

Both trade groups also want the NCUA to be the only agency to write regulations affecting credit unions. For example, while the agency wrote the Truth-in-Savings rule that governs credit unions, Congress mandated that it had to be "substantially similar" to the one drafted by the Federal Reserve.

NAFCU also is asking Congress to remove the limits on nonmember deposits, such as public funds or banks' deposits, that community development credit unions can accept. Currently such funds can represent only 20% of deposits, unless the institution receives a waiver from the NCUA.

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