US Regulators Propose Public Hearings for Large Bank Merger Applications

US Regulators Shake Up Bank Merger Rules, Sparking Industry Backlash

In a bold move that has sent shockwaves through the banking industry, major US regulators are proposing game-changing rules for bank mergers and acquisitions. The Federal Deposit and Insurance Corporation (FDIC) is leading the charge with a radical proposal to hold public hearings for large bank merger applications.

Under the FDIC’s plan, acquirer banks would also be prohibited from closing branches for three years after a merger resulting in a bank with $100 billion or more in assets. This move has left many in the industry reeling, as it would saddle acquiring banks with additional costs at a time when they are looking to cut expenses.

But the FDIC is not alone in its efforts to tighten the screws on bank consolidation. The Office of the Comptroller of the Currency (OCC) has proposed scrapping the fast-track process for bank mergers resulting in new companies with assets exceeding $50 billion.

Acting Comptroller of the Currency, Michael Hsu, has defended the OCC’s proposals as necessary to promote transparency and maintain a diverse and dynamic banking system. However, the banking industry and former regulators have wasted no time in launching a fierce backlash against the proposed changes.

The Bank Policy Institute and the American Bankers Association have both raised concerns about the FDIC’s proposals, questioning their compliance with statutory requirements. Public hearings, in particular, have been criticized as a “very bad” idea by industry experts.

Former FDIC vice-chair, Thomas Hoenig, has also weighed in on the debate, expressing skepticism about the need for increased regulatory scrutiny of bank mergers. The fear of creating “Frankenstein” banks that are too big to fail is driving regulators to clamp down on consolidation in the industry.

Despite the pushback from the banking industry, regulators are standing firm on their proposals. The OCC has extended the comment period for its merger proposals to allow interested parties more time to provide feedback.

While the prospect of increased regulation may be unsettling for some in the banking sector, there are examples of successful mergers that have reshaped the industry. JPMorgan Chase’s merger with Bank One nearly 20 years ago catapulted the bank to the top spot in the world by market capitalization.

CEO Jamie Dimon has emphasized the importance of allowing banks to pursue their individual strategies, including mergers and acquisitions, as they see fit. He believes that consolidation can be a natural and healthy part of capitalism, as long as it is done responsibly and without harming the economy.

As US regulators continue to tighten their grip on bank mergers, the industry is bracing for a new era of scrutiny and oversight. The outcome of these proposed changes remains uncertain, but one thing is clear: the landscape of banking in America is set to undergo a significant transformation.