A virtual public hearing the Federal Reserve and the Office of the Comptroller of the Currency (OCC) set for March 8 — to discuss U.S. Bank’s proposed $8 billion acquisition of MUFG Union Bank — could prove the first test of regulators’ new resolve to give deeper examination to bank combinations.
The hearing — details of which were released Monday — marks the first public gathering bank regulators have called in relation to a merger since BB&T and SunTrust proposed their tie-up in 2019 to form Truist.
More than 60 California-based community advocacy groups wrote the Fed and OCC in November, expressing concerns that the U.S. Bank deal would result in fewer options for low- to moderate-income (LMI) customers and people of color.
Specifically, the groups asked for public hearings in Los Angeles, San Francisco and Fresno, and for an extension on the comment period related to the merger.
The Fed and OCC on Monday did the latter — prolonging through March 11 the span through which they’ll accept comments related to the banks’ applications with the regulators. The Fed and OCC also set a March 1 deadline for anyone seeking to make a public comment at the March 8 meeting.
For its part, U.S. Bank had started a dialogue by last fall with more than 40 California nonprofits who raised questions about the would-be combined bank’s commitment to community credit needs.
The community advocates asked the bank to keep open all branches in LMI neighborhoods; to keep mortgages and consumer loans affordable for those users; to maintain its support for small businesses and for women and nonwhite entrepreneurs; and to ensure Union Bank’s “strong relationships” with community reinvestment and development groups aren’t lost.
“We welcome the continued opportunity to hear from stakeholders and members of the communities that we serve on how we can ensure that this combination provides customers with the banking services they need and fosters competition,” a U.S. Bank spokesperson told American Banker on Monday.
U.S. Bank CEO Andy Cecere said during an earnings call last month he is confident the $8 billion deal could close “later in the first half” of this year, followed by a systems conversion late in the third quarter or early in the fourth.
Since the banks proposed their tie-up, the drumbeat for more scrutiny of mergers in the financial space has grown stronger. Federal Deposit Insurance Corp. (FDIC) Acting Chair Martin Gruenberg on Monday listed a “careful interagency review of the bank merger process” among his top five priorities.
Gruenberg and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra — also a member of the FDIC board — published a review in December of bank merger policies without the prior approval of now-former Chair Jelena McWilliams, who said such a review wasn’t on the agenda. That sparked a fierce, partisan power struggle within the regulator that abated when McWilliams resigned. A third board member, OCC Acting Chief Michael Hsu, participated in the review but didn’t sign it.
The push for closer attention to bank mergers stems from a July executive order from President Joe Biden requiring the Justice Department, Fed, FDIC and OCC to update their guidelines "to provide more robust scrutiny” in that arena.
The Fed and OCC, in Monday’s notice, said they would be evaluating the impact of the merger on communities, particularly as it relates to the Community Reinvestment Act; competition in affected markets; the tie-up’s effect on the stability of the U.S. banking system; and the merger’s impact on the surviving bank’s business and anti-money laundering efforts.
The National Community Reinvestment Coalition (NCRC) expressed its support for the hearing.
“We are glad that this public hearing will give those communities a chance to share their thoughts on the proposed deal,” the group’s CEO, Jesse Van Tol, said Monday in a statement. “It is good for regulators to scrutinize bank mergers to ensure they will benefit the communities affected by such deals.”
