CFPB Head Doesn’t Want to Be ‘Cheerleader’ for Bank Mergers

America’s consumer watchdog says bank mergers are set to become much tougher to pull off.

In an interview with Reuters Thursday (July 20), Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra said lenders should expect more scrutiny into mergers following this year’s banking crisis.

“The ink on the rubber stamp has dried up and … my hope is to see a shift from the regulators of moving from cheerleader to umpire,” said Chopra, also a board member at the Federal Deposit Insurance Corporation (FDIC), which helps oversee bank mergers.

The Reuters report noted that Chopra’s tone contrasts with other regulators, such as U.S. Treasury Secretary Janet Yellen, who have recently shown more enthusiasm for deals to help the regional banking sector, plagued by historic collapses this year.

“There is no question that past adjudications of mergers did not meet the level of analytical rigor that they ought to have,” Chopra told Reuters but declined to give specific examples.

Yellen predicted in an interview last month that this year could bring more mergers if banks report weaker earnings.

“I don’t think it’s a huge threat to the sector, but there will probably be banks that end up wanting to merge,” the secretary told the Wall Street Journal.

She added that additional consolidation in the industry could be healthy while still cautioning against the biggest banks growing even larger.

“We certainly don’t want overconcentration and we’re pro-competition, but that doesn’t mean no” mergers, said Yellen. “We have more banks, relatively speaking, in the United States than almost any country of which I’m aware.”

Chopra’s comments came one day after two other regulatory bodies — the Department of Justice and Federal Trade Commission (FTC), unveiled the first updates on how officials review corporate mergers in years.

“Open, competitive, resilient markets have been a bedrock of America’s economic success and dynamism throughout our nation’s history. Faithful and vigorous enforcement of the antitrust laws is key to maintaining that success,” FTC Chair Lina M. Khan said in a news release.

Meanwhile, the CFPB has found itself under attack from a group of 132 lawmakers who want to change the agency’s funding structure.

Those legislators last week filed an amicus curiae brief to the Supreme Court in support of upholding a lower court’s decision that the CFPB’s funding structure is unconstitutional.

The brief argues that the CFPB is insulated from Congress by its funding structure and functions as “a sort of junior-varsity Congress” determining its own funding levels.