Zions First National Bank is counting on a seven-line passage in pending regulatory relief legislation to protect a multimillion-dollar investment.

Urged by Salt Lake City-based Zions, Sen. Robert F. Bennett, R-Utah, included the provision in the deregulation bill that the Senate Banking Committee approved last week. Though Zions is not mentioned by name, the amendment was tailored to prevent the bank from having to divest a large portion of its 32% stake in the class A common stock of the Federal Agricultural Mortgage Corp.

Similar language was included in the House version sponsored by Rep. Marge Roukema, R-N.J., that the Banking Committe approved Tuesday.

Zions' holdings are threatened by a provision in the 1996 thrift bailout law that banned federal depository institutions from affiliating with government-sponsored enterprises. It was designed to stop a group of Farm Credit System banks in Wisconsin from forming a credit union, but the Federal Reserve Board is applying the provision to Zions' stake in Farmer Mac. Zions is the largest shareholder of Farmer Mac's class A stock and the only bank affected by the prohibition.

W. David Hemingway, executive vice president of Zions, said the bank bought 320,000 of Farmer Mac's class A common shares in April 1996 for $8 apiece. At Monday's closing price of $19.75, the value of Zions' holdings has more than doubled, to $6.4 million.

But according to the Fed, Zions is violating the 1996 law unless it scales back its investment to less than 25%, or roughly 253,000 shares.

"We are happy with our investment," Mr. Hemingway said. "We asked that we be grandfathered because we owned it before the law was passed."

The banking lobby is still smarting from its loss on the credit union bill, which would ease membership limits on the nonprofit institutions. The House on Tuesday approved the Senate version, teeing it up for the President's signature.

"The good news is that Congress is out for the next month, so they can't do any more damage right now," William L. McQuillan, president of the Independent Bankers Association of America, told the Community Bankers Association of Georgia convention Saturday in Scottsdale, Ariz.

"The last few weeks have been a black cloud," said Mr. McQuillan, who is also president of City National Bank, Greeley, Neb. "We need Congress to understand this is not a big-bank issue. It is a community bank issue. For whatever reason, we didn't do a good job getting our message across. We tried, we were on the Hill, but credit unions screamed louder. But we will be back."

Underscoring bankers' threats to withhold campaign donations, he said: "I would encourage you to be selective as to who you give to. You know who your friends are now."

The Securities Industry Association plans to fly 50 to 75 securities executives to Washington on Sept. 9 to lobby senators on financial reform legislation.

That should be the week after the Senate Banking Committee's vote on the bill. "Our plan is to lobby the Senate as a whole, not just the Senate Banking Committee," said Steve Judge, the association's chief lobbyist. "An awful lot of senators (outside the committee) haven't focused on it."

Mr. Judge said he agreed with the emerging consensus that a breakthrough in negotiations over the insurance provisions in the bill could lead to resolution of other disputes. "We were successful in working out some pretty thorny issues in the securities and banking area," he said. "I am sure they can do the same in the insurance and banking area."

Round 3 of negotiations over the insurance provisions of the financial reform bill were held here Tuesday.

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