In a stinging rebuke of the National Credit Union Administration, which supervises and insures 7,200 credit unions nationwide, a federal judge yesterday called it a "rogue federal agency" that is acting like a trade group protecting the industry it is charged with overseeing.

U.S. District Judge Thomas Penfield Jackson said the NCUA acted improperly in soliciting input from two industry trade groups prior to a recent rule change allowing credit unions to expand. He said these actions were an effort to "circumvent" his earlier ruling, which barred credit unions from adding employee members who do not share a common occupational bond.

Jackson said the agency, in adopting the rule, acted in a "surreptitious, underhanded and collusive way," by meeting with officials from the trade groups in an effort to quickly pass its new policy. "I gave serious thought to referring this matter to the attorney general. I think the allegations are extremely serious," Jackson said.

Jackson made his critical remarks at a hearing on issues related to his October ruling, which the industry fears will seriously stunt the growth of thousands of credit unions that have expanded by adding multiple employee groups with no common bond.

Jackson yesterday upheld his order prohibiting federal credit unions from enrolling members who do not share a common occupation or association. The injunction also barred credit unions from adding employee groups that don't share a common bond with them.

Yet Jackson didn't order credit unions to kick out millions of members without a common bond who already have joined.

A federal appeals court in Washington ruled this fall that a 14-year policy by the NCUA to allow federal credit unions to offer membership to groups of employees who work at different companies is illegal.

The NCUA said that since the injunction took effect, about 1,200 potential credit union members have been turned away every day. The court order affects about 3,500 of the nation's 7,200 federally chartered credit unions, including 68 in the Washington area.

However, to counter the injunction, the NCUA board last month approved an interim rule that gave credit unions another option to expand. The policy allowed credit unions to sign up members from different groups based on employment in a trade, industry or profession.

That policy change and how it was arrived at was the subject of Jackson's wrath. He voided the policy because he said it violated his earlier injunction. He also ordered the agency to rescind the 31 credit union expansions already approved.

Attorneys for the NCUA and the trade groups said they have done nothing wrong.

While officials for the agency and the trade groups said they had talked prior to the adoption of the rule, they maintained that such contact had not been improper.

"Frankly, we believe the bankers blew the communications out of proportion," said Brenda Furlow, general counsel for the Credit Union National Association. "We believe the communications were proper. This basically is an issue of bankers wanting to eliminate or minimize competition."

NCUA Chairman Norman E. D'Amours said after the hearing that the agency's actions were consistent with prior practice.

"We are just trying to be a good regulator," D'Amours said. "We acted quite properly. This is an emergency. People of small means are being denied financial services."

Jackson said he would await further evidence from the NCUA that it had acted properly, but said he was so disturbed by the agency's actions that he had considered prohibiting it from approving any new applications for credit unions to expand without prior review from the court.

Further aggravating Jackson was a recent letter-writing campaign, in which he said he received 250 form letters from credit unions denouncing his injunction. "And, they continue to come in by the handfuls," Jackson said.

Lawyers for the trade groups said they had not supported such a campaign and have taken steps to stop it.

Representatives from the banking industry were surprised at Jackson's candid criticism of the NCUA. They were nonetheless elated that he had agreed with them that the NCUA had sought to get around the court order. "We can't disagree with the judge that they keep ignoring the law," said Michael Crotty, deputy general counsel for the American Bankers Association.

D'Amours said no credit union will be put out of business immediately by the judge's actions, but many might have to close or be consolidated with other credit unions if their membership doesn't expand.

"Over a period of time, this will have an impact on the ability of these financial institutions to operate the way they have," he said. CAPTION: TAKING OFF (This chart was not available) CAPTION: JUDGE THOMAS PENFIELD JACKSON