WASHINGTON - The National Credit Union Administration is winding more red tape around the industry's largest merger.

In an extraordinary move, the agency has set a public hearing for Feb. 14 at its Alexandria, Va., headquarters to gather testimony on whether Patelco Credit Union and First Technology Federal Credit Union should be allowed to merge.

NCUA is holding its first public hearing in roughly 15 years because it fears that a merger by the two West Coast credit unions would tarnish the industry and lead to other combinations of large institutions.

But Thomas Sargent, president of First Technology, Beaverton, Ore., said some agency officials want to kill the deal.

"I think there are a lot of people inside and outside the agency who'd like to see us withdraw" the application, he said. "A lot of people like the status quo, and this changes the status quo."

The proposed merger is not likely to spark a trend, he said.

"We always felt this was a unique merger and not a trendsetting one, so we thought public comment was unnecessary," Mr. Sargent said. "Then again, it's not our decision."

The NCUA also is preparing new regulations governing the mergers of large credit unions. Comments it collects at the hearing will play into those rules, as well as the West Coast merger.

"Concerns have been raised with respect to the economic impact the merger would have on other credit unions, as well as the effect the merger would have on the continued ability of credit unions to operate as a cooperative movement," said the agency's notice for a public hearing.

The NCUA is hoping a "broad range of witnesses representing a range of opinions" will testify, said Bob Loftus, director of public and congressional affairs at the NCUA.

Mr. Sargent said he and Patelco president Ed Callahan might not testify, relying instead on comments in the merger application.

If the merger is approved, the new entity would be the 10th-largest credit union, with $1.2 billion in assets.

When the merger was announced last August, it included the ailing Seattle Telco Federal Credit Union. Last month that group pulled out, citing the NCUA's delays in approving the transaction.

Mr. Sargent said he's already had enough delays.

"We want to get on with our lives, and this only extends" the process, he said.

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