WASHINGTON - Nearly 2,000 credit uinion executives and volunteers will be spreading the industry's gospel on Capitol Hill this week.

The No. 1 message: It's time for regulatory relief.

"This Congress represents a big opportunity for regulatory reform," said Charles O. Zuver, director of governmental affairs for the Credit Union National Association, which is holding its annual Governmental Affairs Conference today through March 1.

"I think it'll be a good year. I think it'll be a fun year."

Peter Disylvester, president of Motorola Employees Credit Union and chairman of CUNA's Governmental Affairs Committee, also sees a lot of potential.

"We're very hopeful there'll be some relief," he said. "We haven't zeroed in on what areas but we ... can start with - Truth-in-Savings, Truth-in-Lending."

Still, some dark clouds hang over the industry in Washington, including a legislative assault by the two leading banking trade groups and heightened congressional scrutiny brought on by investment problems suffered by an industry liquidity center.

If that weren't enough, some in the industry feel their regulator is less an ally than a foe. (See story below.)

Still Mr. Zuver is optimistic, buoyed by the move in Congress to whittle regulation.

CUNA has been working with the staffs of Sen. Richard Shelby, R-Ala., and Rep. Doug Bereuter, R-Neb., in crafting a comprehensive regulatory reform bill.

"Senators (Connie) Mack (R-Fla.) and Shelby have initiated the reg relief process, and that in itself is a dramatic change from the past," Mr. Zuver said. "We're definitely going to be seeing some kind of reg relief."

The time is ripe to repeal, or at least streamline, laws including the Home Mortgage Disclosure Act, rescission rights for first mortgages, and Truth in Savings, he said.

CUNA plans to tap the industry's state trade groups more often this year in lobbying Congress, a strategic move designed to diffuse the country's anti-Washington mood.

"A lot of people ran against Washington and they're probably leery" of working with Washington lobbyists, Mr. Zuver said. (See story below profiling CUNA lobbyists).

Credit unions favor shedding many of the same regulations as banks, but the two industries aren't collaborating as they did last year on bankruptcy law reform.

Although the American Bankers Association and the Independent Bankers Association of America are working to cut red tape for banks, they're seeking to wind more around the credit union industry.

The two banking trade groups are working together to bring credit unions under the Community Reinvestment Act and impose taxes on the industry.

Mr. Zuver predicted that the credit union industry, which packs considerable grass-roots power, will be able to fend off the bankers' assault.

But bankers are encouraged by the heightened congressional scrutiny their rival industry has received, thanks to investment problems suffered by Capital Corporate Federal Credit Union, which was seized by the National Credit Union Administration last month.

The corporate's seizure triggered two congressional hearings, one held by the House Banking Committee Friday and one scheduled by the Senate Banking Committee for Tuesday.

Bankers said the lesson of Cap Corp is that credit unions need to come under stricter regulation, a position they long have advocated.

"The thing we've been pushing is that credit unions should comply with the same rules as banks, and that includes ones concerned with safety and soundness," said Diane Casey, executive director of the IBAA. "What happened at Capital Corporate boils down to an abuse of safety-and- soundness."

But Mr. Zuver said that Cap Corp is an aberration among corporates, most of which invest conservatively.

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