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June 14, 2024

Changes To OCC’s Merger Rules Are Desperately Needed To Protect The Financial System And Main Street America From Too-Big-To-Fail Banks

WASHINGTON, D.C.— Better Markets filed a Comment Letter to the Office of the Comptroller of the Currency (OCC) on Business Combinations Under the Bank Merger Act.

Why it Matters. An insufficient merger review process has contributed to massive consolidation in the banking industry over the past several decades, creating multiple too-big-to-fail (TBTF) banks. Since the mid-1980s, the number of banks in the US has declined by roughly 70 percent, primarily because Wall Street megabanks continue acquiring smaller banks. Not only does this decline threaten the viability of community banks which are often the lifeblood of Main Street America, it harms consumers, small businesses, and communities across America with less access, fewer choices, and higher costs for banking services.

What we said. We strongly support parts of the OCC’s proposal that remove automatic and expedited approval of bank mergers. These changes eliminate paths that are currently available for merging banks to evade regulatory scrutiny. They will also allow for appropriate and necessary public input on mergers. When not properly reviewed, mergers present serious risks and costs to financial stability and Main Street Americans. For example, numerous failures in the merger process allowed New York Community Bank and Flagstar Bank to grow into a systemic threat.

Bottom Line. We urge the OCC to strengthen its proposal and close the unnecessary and problematic loopholes that would continue to allow for last-minute mergers to threaten financial stability and consumer protection. As written, the proposal would dangerously codify a set of broad, vague statements rather than defining specific guidelines to appropriately govern bank mergers. The rule must be much more specific and binding to increase clarity for banks, regulators, and the public.

You can read the full comment letter here.


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