The House Banking Committee will vote Thursday on legislation to let credit unions expand beyond a single, common bond.

The bill, spearheaded by committee Chairman Jim Leach, would gut the banking industry's Feb. 25 Supreme Court victory in the AT&T Family Federal Credit Union case.

If the measure is enacted, occupation-based credit unions such as AT&T Family could serve unrelated companies as long as they employ fewer than 3,000 people.

The legislation would require credit unions to comply with bank-like regulations, including community reinvestment requirements. As an enticement to bankers, the legislation would let the Federal Reserve pay interest on required reserves.

In trying to strike a compromise, however, Rep. Leach has failed to win over either banks or credit unions.

"There are still some provisions we have some concerns about," said Daniel A. Mica, president of the Credit Union National Association.

Edward L. Yingling, chief lobbyist for the American Bankers Association, said lawmakers "continue to target the right issues, but it appears to us the language is extremely weak."

For example, federal regulators would be permitted to waive the common bond limitations to prevent insolvencies, among other reasons, he said.

Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America, objected to the 3,000-employee cut-off as too high.

Last month's Supreme Court decision sparked a surge of lobbying by both banks and credit unions. House leaders have pledged to enact a fix for credit unions by April 2, and may even tie the bill to broader financial reform legislation.

(Separately on Monday, Chase Manhattan Bank announced its opposition to the financial reform bill. "While the bill contains much we like, including most of the compromise reached between the securities and banking trade associations, it does not provide banks with sufficient protection from discriminatory state insurance rules," chief executive Walter Shipley wrote in a letter to House Republican Conference Chairman John Boehner, R-Ohio.

In the Senate, Banking Committee Chairman Alfonse M. D'Amato has scheduled a hearing for Thursday featuring credit union regulators explaining the impact of the court decision.

Credit unions want a simple bill that reverses the ruling and imposes no new regulations, while banks want large credit unions barred from adding unrelated employee groups unless they pay taxes and comply with the kind of regulations banks do.

Intense lobbying over the weekend forced Reps. Leach and John J. LaFalce, D-N.Y., to soften the pro-bank version of the bill they were working on last week.

The 34-page credit union bill that surfaced Monday is less than half the length of last week's version. For instance, it eliminates the requirement that state-chartered credit unions meet the same common bond requirements as federally chartered institutions and significantly scales back which bank regulations credit unions would have to follow.

Under the bill, credit unions could continue serving existing members and adding members from groups that they already serve.

The National Credit Union Administration would have to tighten the definition of community-based credit unions and also would have to create rules to make sure these institutions serve people of "modest means." NCUA would conduct annual exams to ensure compliance.

The bill would codify current NCUA rules that credit unions may not make business loans larger than $50,000 without meeting stringent reporting requirements nor lend more than 15% of reserves or $75,000 per business borrower.

The bill would raise the Credit Union Share Insurance Fund's required reserve ratio to 1.5% from 1.3% before it could start paying dividends.

Credit unions would lose as much as $1 billion over five years in dividends, said Kenneth L. Robinson, president of the National Association of Federal Credit Unions.

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