GRAND RAPIDS, Mich. -- The credit union lobby's past victories on Capitol Hill may be to blame for the congressional scrutiny the industry is receiving now.

That's the word the industry's leading lobbyist, Charles O. Zuver, spread at a legislative meeting during the Michigan Credit Union League's annual convention last week. About 1,000 credit union officials attended the conference.

Mr. Zuver, director of governmental affairs for the Credit Union National Association, said congressional staffers are irate that the industry escaped relatively unscathed from the sweeping banking legislation of the 1980s and 1990s.

Lawmakers might see U.S. Central Credit Union's $255 million investment in a troubled Spanish bank as an excuse to "slap credit unions on the head," Mr. Zuver said.

House Banking Committee Chairman Henry B. Gonzalez has launched a wide-ranging probe of the industry that will include hearings this summer.

The Texas Democrat started probing in response to U.S. Central's investment in Banco Espanol de Credito, Mr. Zuver said.

Once begun, the probe widened to include CUNA, the National Credit Union Administration and other areas of the industry, Mr. Zuver said.

"Gonzalez has never been a friend" of the industry, Mr. Zuver said.

Mr. Gonzalez previously has supported folding the NCUA into a single regulator and bringing credit unions under the Community Reinvestment Act.

Mr. Zuver said he expects three or four days of hearings this summer.

Some Midwestern credit unions haven't understood a letter from National Credit Union Administration Chairman Norman E. D'Amours encouraging them to increase lending.

Nicholas Veghts, director of the regulator's Midwest region, told the conference that some credit unions are making more loans. He noted, however, that some institutions are ignoring what Mr. D'Amours said about increasing risk management.

Second Page to Letter

"I've been getting letters saying examiners aren't listening to the letter," Mr. Veghts explained. "They haven't read the second page."

A few credit unions "tend to want to get into things without knowing what to do," he said.

Mr. Veghts also said credit unions selling mutual funds must be sure customers know their money is not insured by the federal government.

He noted one credit union's advertising for mutual funds said they weren't insured but included the NCUA seal, which suggested the funds were.

"This can create confusion," Mr. Veghts said.

The Michigan Credit Union League is scrambling to block a bill before the state Senate that would bar credit unions from doing something they don't do now - selling insurance.

The league is looking ahead, when selling insurance or acquiring insurance agencies might be important lines of business, said Wendy Batchelor, a lobbyist for the association.

"We can't support legislation that will be severly restrictive in the future," she said.

The league is urging credit unions to write to senators in their districts to oppose the bill.

The bill passed the state House of Representatives in May by a wide margin, she said.

The Michigan insurance industry pushed for the bill after the Michigan Supreme Court ruled this year that financial institutions could sell insurance.

Michigan banks and thrifts also are opposing the bill, although the league is not working in a coalition with them.

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