Fed Watchdog Says Bank Merger Reviews Are Getting Slower

The Federal Reserve’s internal watchdog has found that the central bank is taking longer to approve bank mergers and acquisitions than it did four years ago, despite launching a dedicated reform effort to speed things up. The finding lands at a moment of heightened scrutiny over regulatory bottlenecks in banking and adds pressure on the Fed to show it can process deals efficiently as consolidation activity among community banks continues.

The Fed’s Office of Inspector General (OIG) released the evaluation Monday (March 23), concluding that the Division of Supervision and Regulation lacks the data infrastructure needed to identify where delays are occurring and fix them. The report covers merger, acquisition and change-in-bank-control applications filed by community banks, defined as institutions with less than $10 billion in assets.

The report found median processing times across all application types rose roughly 11% between 2021 and 2024, even as the volume of completed applications fell 20%. Merger and acquisition reviews fared even worse: processing times climbed about 40% for small community banks and 18% for larger ones. This happened after the Fed hired an outside contractor in 2019 to recommend efficiency improvements, and after the division implemented a new tracking system called FedEZFile in 2022.

The core problem, the OIG found, is that FedEZFile doesn’t capture enough of the right information. Key internal steps, including kickoff meetings, each division’s review of final materials and governors’ notation votes, were not being recorded in the system. Without that data, managers couldn’t pinpoint where applications were getting stuck. Staff were also keeping manual spreadsheets to compensate, but those were incomplete and inconsistent. The OIG reviewed 15 applications and could not reconstruct full processing timelines for most of them.

Interviewees inside the Fed pointed to several culprits: incomplete responses from applicants, slow turnaround from other regulators, background check delays and what the report described as insufficient internal delegation, with multiple senior officials, including division directors, reviewing the same materials separately.

“The Board has been unsuccessful in improving processing times since the contractor’s 2019 review despite implementing measures to improve efficiency,” the OIG wrote.

The Fed’s S&R division concurred with all three recommendations in the report: mandatory staff training on FedEZFile’s new data fields, development of real-time dashboards for tracking application status and a formal process to periodically review whether time targets are realistic. The division updated FedEZFile in October 2025 to capture the missing milestones and issued guidance in December. Mandatory training is scheduled for the third quarter of 2026, with enhanced reporting dashboards planned by the first quarter of 2027. The OIG said it will monitor whether those steps improve processing times.