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On October 15th, 2010 Oregon State regulators approved the $4.5 billion merger of First Technology Credit Union with Addison Avenue credit union, the biggest such merger in credit union history.   In my opinion, this results from a complete breakdown in the integrity of the credit union regulatory process.   For this reason I have written directly to the Securities and Exchange Commission and the FDIC with the hope that they will lend support to the notion that, prior to approval, important disclosure standards be first met.  See April 21, 2010 related blog post for additional background information.

During the last 6 months I have requested that both First Tech and Addison Avenue fulfill their responsibilites to members, specifically asking for more details regarding executive compensation, their respective investment portfolios and also allowing a 90 day period for member review rather than the planned 45 days.   To many members this merger is an “inside job” that would not be supported by members if adequate disclosures were made.  Although the CEO’s offered to meet me and discuss the issues several times, I thought it inappropriate and we have therefore only communicated via phone and email.  Adequate disclosure should speak by itself, and to all members simultaneously.

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Disclosure: As an SEC Registered Investment Advisor, I often recommend to clients that they maintain a strategic relationship with a credit union.  Doing so can provide high quality loan services when necessary, in addition to a dramatic reduction on all fees, including VISA interest, etc.  I am a true believer in Credit Unions, although they were never designed for large deposit balances.   My previous experience includes being a Certified Public Accountant and Chief Financial Officer at the State’s 3rd largest credit union.

The purpose of this comment is to use the proposed merger between First Technology Credit Union, based in Portland. Oregon, and Addison Avenue Credit Union, based in Palo Alto, California, to highlight that while banks are taking a beating over executive compensation, almost no attention has been given to credit unions.  Doing so reveals a full spectrum of situations, some needing additional disclosure.  Also included are simple reform proposals.  Also see updated blog post on October 20, 2010 following approval by Oregon State regulators.

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