Banks are finding it easier to merge since Donald Trump took office, and since federal regulators have revised policies to make the approval process faster to complete.
According to The Wall Street Journal (WSJ), the Federal Reserve revealed that the average merger review time — with opposition from community groups — fell to 3.8 months in the first half of 2018 from 5.6 months in the first half of 2017, and seven months in 2015. At the Office of the Comptroller of the Currency (OCC), the average time decreased to 1.9 months in 2018 from 2.6 months in 2016.
However, while banks are happier with the faster approval process, critics are worried that these mergers could hinder competition, as well as reduce the number of branches in rural areas. The Federal Reserve’s “anemic scrutiny of applications for mergers and acquisitions [M&A] raises concerns that [it] may oversee a wave of bank consolidation to the detriment of consumers and the financial system,” said Senator Elizabeth Warren (D-MA) in a recent letter to Federal Reserve Chairman Jerome Powell.
Another issue is that community input doesn’t seem to carry much weight anymore. In fact, the OCC told its examiners to investigate some community group claims separately instead of within the approval process.
“We require a certain level of detail and specificity in comments,” said Comptroller of the Currency Joseph Otting in a written statement. “The changes ensure that concerns are validated by exam staff who are best-positioned to review [their] merits.”
As the former chief executive of OneWest Bank, Otting dealt with opposition from community groups when the bank was looking to complete a deal in 2014. Due to this, he has concerns that community groups “pole vault in, and hold [bankers] hostage.”
Community groups pointed out, however, that they often use the review process as a way to urge financial institutions to better serve underbanked communities.
“As banks grow and they hold more market share, they should produce more of a public benefit,” said Jesse Van Tol, chief executive of the National Community Reinvestment Coalition, a fair lending advocacy group. “A way of ensuring that accountability is to have the public involved in the oversight of what they’re doing.”