The Federal Deposit Insurance Corp. (FDIC) submitted to the Federal Register a request for information (RFI) on Friday regarding mergers involving one or more insured depository institutions.
The agency is accepting comments for 60 days "on the effectiveness of the current laws, practices, rules, regulations, guidance and statements of policy that apply to merger transactions" in the banking sphere, it said in a release.
The FDIC is reviewing the regulatory framework surrounding bank mergers in response to “significant changes over the past several decades” in the industry, it said. Those changes include the growing proportion of large, systemically important banks and the 2010 passage of the Dodd-Frank Act, which amended the Bank Merger Act so regulators would consider the broader ramifications of banking tie-ups for financial stability.
The agency asserts that the growth of systemically important banks has come at the expense of smaller institutions. "The declining number of smaller insured depository institutions may limit access to financial services and credit in communities,” while larger banks pose systemic risk concerns, the FDIC wrote in the RFI.
The RFI kick-started a contentious debate in the agency in December, which ultimately culminated in the resignation of the FDIC's former chair, Trump-era appointee Jelena McWilliams.
The RFI also comes in response to an executive order the White House issued in July, instructing U.S. agencies to revitalize bank merger oversight.
With Democrats in full control of the FDIC board following McWilliams’ departure, the agency is asking questions about heightened scrutiny of banking mergers.
The RFI inquires whether the FDIC should consult the Consumer Financial Protection Bureau (CFPB) in bank merger review, and asks if the existing regulatory framework requires an appropriate burden of proof from the merger applicant that meets the requirements of the Bank Merger Act.
The FDIC also asked whether the agency should “presume that any merger transaction that results in a financial institution that exceeds a predetermined asset size threshold, for example of $100 billion in consolidated assets, poses a systemic risk concern?”
CFPB Director Rohit Chopra, a member of the FDIC board, took to Twitter on Friday to post the press release, saying the FDIC "opened a docket to review bank merger policies and is asking the public to weigh in." In his post, Chopra also labeled (non-specific) large banks "empires."
Acting Comptroller Michael Hsu — another FDIC board member — said, “The OCC, for its part, has recently focused on facilitating collaboration on bank mergers amongst the federal banking agencies and the Department of Justice to help ensure that timely progress is made on a coordinated, interagency basis,” according to a statement seen by American Banker.
“I look forward to continuing to work with my interagency colleagues on updating and strengthening the [previous] guidelines," Hsu said.
