WASHINGTON - The National Credit Union Administration appeared to ease congressional concerns about liquidity and investment problems at Capital Corporate Federal Credit Union by pledging tighter supervision in the future.

Speaking Friday before the House Banking subcommittee on financial institutions and consumer credit, NCUA Chairman Norman E. D'Amours announced that next month the agency will issue for comment tough capital and investment regulations for corporates.

"I will recommend to the board that we make significant changes in the corporate credit union regulations in the very near future which will address the need for stronger capital, and tighten corporates' investment authority in order to avoid another Cap Corp situation," Mr. D'Amours said in his testimony.

Rep. Marge Roukema, R-N.J., chairwoman of the subcommittee, indicated she was pleased with Mr. D'Amours' direction, but put the regulator on notice that the panel would be watching him.

"We'll be expecting reports and updates," she said.

Mr. D'Amours criticized some of the 43 corporates - Cap Corp among them - for straying from their original mission of providing liquidity to credit unions and acting more like investment banks.

To counteract this, the agency will require corporates to move closer to a "matched book" operation, in which loans and investments are funded with deposits of similar maturity.

Most corporates already act this way, but some operate under a "managed risk" system, in which there is a mismatch between terms of deposits and investments.

Also, Mr. D'Amours said the NCUA may limit collateralized mortagage investments so they don't exceed a corporate's primary capital.

Depending on how far NCUA goes in its regulations, the rules could invite virulent opposition from the industry. There is concern that if corporates are hobbled, credit unions seeking a higher yield will pull out money and place it with brokers.

"I don't believe corporates could maintain their return to members if they go to a matched book," said Philip F. Donovan, principal of the Calibre Financial Group Inc., Memphis.

James R. Bell, president of U.S. Central Credit Union, said, "Undue constraints could jeopardize corporates' abilities to attract and retain the funds needed to fulfill their primary roles as liquidity providers."

Although lawmakers expressed concern that the NCUA missed some "red flags" in the Cap Corp matter - and Rep. Albert Wynn, D-Md. questioned why the regulator didn't move in earlier - they seemed to back the agency's decision to put the institution into conservatorship.

"You did the right thing," said Rep. Paul E. Kanjorski, D-Pa.

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