Four Democratic senators are calling on the Federal Reserve to overhaul its approach to big-bank mergers, citing this year’s spate of regional bank failures as cause for a revamp.
U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Banking, Housing and Urban Affairs Committee, was joined by Sens. Elizabeth Warren (D-MA), Jack Reed (D-RI), and John Fetterman (D-PA) in sending a letter to Federal Reserve Chairman Jerome Powell and ViceChair for Supervision Michael Barr. The letter urged the Fed to review and reconsider its approach to bank mergers, including its framework for evaluating a bank merger’s impact on financial stability.
“We cannot perpetuate a banking system that favors the largest, most complex institutions and puts consumers, smaller institutions, and our financial system at risk,” said Sen. Brown.
The letter referenced the failures of Silicon Valley Bank (SVB), Signature Bank, Credit Suisse, and First Republic earlier this year. It also pointed out the Federal Reserve has not issued any rules or guidance on types of bank mergers that would implicate financial stability concerns, nor had it responded to Sen. Brown’s prior letter on the matter.
Related: DOJ’s Kanter Calls For An Update On Bank Merger Guidelines
Department of Justice (DOJ) Assistant Attorney General Jonathan Kanter highlighted the need to reexamine bank merger policy, emphasizing the importance of competition in banking and its role in promoting a free and fair economy.
“The department’s bank merger review process will take into account concentration levels across a wide range of metrics beyond bank deposits and branch overlap,” said Kanter.
Meanwhile, Michael Hsu, the Acting Comptroller of the Office of the Comptroller of the Currency, said his agency is working with the DOJ and fellow bank regulators to review how it evaluates and approves bank mergers.
The Federal Reserve drew criticism for its June 2021 approval of Silicon Valley Bank’s acquisition of Boston Private, in which the central bank said the resulting organization would not pose significant risk to the financial system in the event of financial distress. The senators also expressed concern about the assumption of failed bank assets by JP Morgan Chase following the bank’s acquisition of First Republic Bank in May.
Sen. Brown said he hopes the Federal Reserve will respond “thoughtfully and quickly” to their letter: “The central bank should reconsider its policy regarding large bank M&A, as well as its framework for evaluating a merger’s impact on financial stability. The Fed’s application of the financial stability factor has not been rigorous enough.”
Source: Banking Dive
Featured News
Google and South Carolina Clash Over State Records Demand
May 8, 2024 by
CPI
Telefonica Germany Teams Up with Amazon Web Services to Migrate 5G Customers
May 8, 2024 by
CPI
Federal Judge Grants $7.4 Million Settlement in Pork Price-Fixing Case
May 8, 2024 by
CPI
Wilson Sonsini Bolsters Antitrust and Competition Practice with Key Partner Returns
May 8, 2024 by
CPI
EU to Scrutinize Telecom Italia’s Network Sale to KKR
May 8, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI