Ralph S. Swoboda, president of the Credit Union National Association, has his own theory on why bankers in four states -- with others likely to join them -- have challenged the membership bases of credit unions in court.

"They're not doing their job," said the president of the largest credit union trade group at its 1993 convention in Cincinnati. "The pressure is coming from some small banks that are facing competition for the first time."

At the convention, Mr. Swoboda announced that the trade group will retaliate against bankers' attacks by providing legal support to credit unions and the federal regulator, launching a public-relations campaign, and looking at opposing legislation desired by bankers.

As part of its public-relations campaign, the association plans to release figures it says will repudiate banks' charges that credit unions are a threat to their existence. One of these figures shows that the combined assets of Citicorp and BankAmerica Corp.-- $410 billion -- is one and a half times the total assets of the credit union industry.

|David and Goliath'

"It's like David and Goliath," Mr. Swoboda said.

Justin Moran, spokesman for the Michigan Bankers Association, sees the situation differently.

"If I were managing Chase Manhattan or one of the other big banks, I could say," Frankly, I don't give a damn... about credit union competition, he said. "But if I have a community bank and I'm dealing in a marketplace where I'm doing essentially retail business, I'd be worried about credit unions."

Mr. Moran says that credit union tax breaks and exemptions from some regulations gives them an unfair advantage. In addition, the ability for some credit unions to expand into communities is another benefit at banks' expense.

"If you have well-managed credit union and an equally well managed bank, the credit union will have the bank for lunch," Mr. Moran said.

Banks in North Carolina, Michigan, Utah, and Montana have been willing to spend time and money to limit the expansion of credit unions.

Lawsuits by Banks

In three of the four lawsuits, a controversy rages over the 1934 Federal Credit Union Act, which states, "Federal credit union membership shall be limited to groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community, or rural district."

Banks have had a twofold struggle in the lawsuits. First. they need to show they had standing at all to sue credit unions over approval of expansion. They also need to prove that the National Credit Union Administration, the federal regulator, has exceeded its chartering authority.

Bankers in North Carolina and Michigan have been successful arguing the first point. But in Michigan, the only state where a case has been tried all the way through in federal district court, bankers have lost. They are appealing to the circuit court in Cincinnati.

Just as bankers in Michigan haven't given up, neither have banks in other states who have not yet filed lawsuits but are considering doing so, said Michael Crotty, deputy general counsel for the American Bankers Association.

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