Speaking before the Senate Banking Committee on Tuesday (February 26), Jerome Powell said that regulators will be “going through our process carefully and thoroughly” when reviewing the application, which has not been filed yet, according to TheStreet.
Earlier this month, SunTrust and BB&T announced plans for a $66 billion merger that will make it the sixth-largest U.S. bank based on assets and deposits. The new company, which will operate under a new name, will have about $442 billion in assets, $301 billion in loans and $324 billion in deposits, serving more than 10 million households in the U.S. The deal is an all-cash merger of equals and is expected to close in Q4 2019.
Powell’s comments came after Democratic Sen. Elizabeth Warren pointed out at a Washington hearing that since 2006, the Fed has approved more than 3,800 bank merger applications — and has not rejected even one.
“Zero percent,” Warren said. “Your approval process itself appears to be a rubber stamp.”
But the Federal Reserve Chairman defended the process, explaining that because bank executives often have private conversations with regulators before filing formal merger applications, they might ultimately decide not to file or withdraw an existing application. Both of these factors could account for the low denial rate.
Warren also pointed out that while the approval process includes a public comment period where any interested parties can speak up against a potential merger, statistics show that the Fed seems to have already made a decision before anyone gets a chance to speak up.
“You and the banks get together and grease the wheels before the merger is announced,” she said. “If the public wants a chance to weigh in, they have to wait until you’ve already made a decision.”