WASHINGTON, D.C. – U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, has called on the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) to ensure their updated bank merger policies adequately scrutinize mergers' effects on consumers and communities.
"Last year’s bank failures coupled with an increasing trend towards concentration in the banking industry demonstrate the immediate need for the OCC, the other banking regulators, and the Department of Justice (DOJ), to collectively complete a comprehensive update of the bank merger review framework to ensure consumers, and not just Wall Street, benefit from these transactions," Brown wrote in his letter to the OCC.
Senator Brown previously led efforts urging the Federal Reserve to overhaul its big bank merger policy to prevent economic destabilization. He emphasized that recent proposed rulemaking by the OCC is a step toward necessary reforms. This includes eliminating loopholes allowing certain mergers to be approved merely by time passage and setting clear guidelines for when a merger application might be consistent or inconsistent with approval.
The letter further stressed that scrutiny must extend beyond short-term impacts. "Frequently, when a merger or acquisition is announced, bank executives point to 'synergies' and 'economies of scale' that will be realized after a transaction is completed," Brown stated. However, he noted that such synergies often result in lost jobs and reduced access to banking services.
Brown urged that any final rules must ensure thorough assessments of potential job losses or reduced opportunities due to proposed transactions. He emphasized that mergers should only be approved if they address community needs comprehensively rather than serving solely shareholders' interests.
Regarding large banks and Global Systemically Important Banks (GSIBs), Brown highlighted concerns about financial stability risks posed by significant mergers like Capital One's proposed acquisition of Discover. He argued that such transactions should automatically trigger enhanced scrutiny.
Brown also addressed rapid growth among acquiring banks as seen in Silicon Valley Bank's case before its failure last year. He appreciated increased scrutiny for rapidly growing banks engaging in multiple acquisitions with overlapping integration periods.
On competitive effects under consideration by OCC per Bank Merger Act requirements, Brown criticized reliance on outdated 1995 frameworks focusing solely on deposits and branch locations. He urged development of modern analytical methods reflecting current banking dynamics including online services.
Public input was another critical aspect raised by Brown who advocated for transparent processes ensuring effective outreach to impacted communities regarding proposed transactions.
In closing his letter, Senator Brown underscored importance of coordinated regulatory efforts among various agencies overseeing banking sector stability through comprehensive assessment principles guiding merger reviews.