KANSAS CITY, Mo. The industry's regulator and the head of its largest trade group faced off during the Credit Union National Association's annual convention here.

The issue: the National Credit Union Administration's plan to bar corporate credit unions and trade groups from sharing managers.

In a speech last Sunday, NCUA Chairman Norman E. D'Amours accused the trade group of ignoring the majority of credit unions that support an end to management interlocks.

"It is difficult for me to understand why there is such fierce and unyielding opposition," Mr. D'Amours said, adding that the agency's proposal shifts more control back to members of corporates and reduces potential conflicts of interest.

"You can't serve two masters," he said.

CUNA president Ralph Swoboda, in a speech following Mr. D'Amours', said the regulator is going too far.

"The proposal the agency has issued on interlocks has fatal flaws," Mr. Swoboda said. "CUNA has a legitimate and proper role of challenging the agency."

Last week, CUNA's board set aside $150,000 to finance a lawsuit to stop the agency.

In an interview Mr. D'Amours. criticized CUNA for contemplating a lawsuit. "A lawsuit is a mistake," he said, adding that he does not think a case will be brought. "If it is, we'll win."

Privately, some trade group officials said Mr. D'Amours was taking their opposition to the proposal personally,. particularly after receiving a rough reception Friday from some CUNA officials.

Mr. D'Amours denied this during an interview, but said he had been warned about taking on the interlocks issue.

"I was informed that if you're going to do this,-you better be ready to be .beat up," he said.

Mr. D'Amours said the interlock proposal is defusing interest in Congress to legislate credit union issues. House Banking Committee Chairman Henry B. Gonzalez launched an investigation of corporates after U.S. "Central, the lead liquidity center, invested $255 million in a troubled Spanish bank.

"I don't know if people in the industry know how poised both banking committees were to take action," Mr. D'Amours said.

The annual convention comes on the heels of a decision by the boards of U.S. Central and CUNA to sever their management arrangement, which was worth $782,000 to the trade group.

Mr. Swoboda no longer serves as president of the Overland Park, Kan.-based institution. Mr. Swoboda denied there was a contradiction between ending this interlock and the trade group's opposition to the proposal.

"The time had come to separate," he said, "Whether it's appropriate for governance to be decided by the regulator is another issue."

During his speech, Mr. D'Amours called the move a good first step. But he also said blasted an official with the Corporate Network Brokerage Services, a subsidiary of U.S. Central, for sending a letter to a trade magazine urging credit unions to make investments, not loans.

"This kind of thinking at the highest' levels of the credit union movement is absolutely outrageous," he said. "It is a cancer within the movement. It cannot be tolerated."

Currently, about half of the 44 corporates share board members or managers with state leagues, which are affiliated with CUNA. A proposal issued last month, which was the result of the agency's six-month review of the corporate system, would restrict these interlocks.

Under the proposal. at least a majority of a corporate board's members including its chairman

must represent individual credit unions and not Work for a "credit-union-related organization."

Also, for purposes of meeting the majority, a credit union official could be barred if someone else from the institution works for a trade group.

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