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May 31, 2022

FDIC Must Work with the Other Banking Agencies to Strengthen the Insufficient Bank Merger Review Process

WASHINGTON, D.C.—Phillip Basil, Director of Banking Policy, issued the following statement on the filing of Better Markets comment letter to the Federal Deposit Insurance Corporation on their request for information and comment on ways in which the review of bank mergers could be enhanced.

“Federal banking regulatory agencies and the Department of Justice must work together to modernize and strengthen the merger review guidelines by more fully and appropriately assessing community needs, financial stability concerns, and prudential factors. Large mergers not only increase financial stability risks but also can harm hardworking Americans and small businesses. And mergers more generally can lead to a reduction in consumer banking services or increase the cost associated with them, or even to a lack of access altogether when branches are closed.

“An insufficient merger review process, combined with other factors such as changes in laws and economic events, has contributed to massive consolidation in the banking industry over the last three and a half decades. Because of this, there has been an unending race to create ever-bigger Wall Street banks. The agencies currently are considering two merger applications that would create the seventh and eighth largest banks, and these applications follow on from two merger approvals that created the ninth and tenth largest banks just a couple years ago. Allowing this race to continue without appropriate consideration for consumers, communities, and financial stability would be a disservice to the American people.

“The review process must work to enhance the public interest and the servicing of the convenience and needs of underserved communities while reducing, or at least not increasing, the level of risk in the system. The common-sense enhancements to the review process proposed in our comment letter would go a long way to achieving this. After nearly forty years, the agencies need to take account of the ever-increasing consolidation of the banking industry and strengthen the merger review process.”

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.

Contact: Anton Becker, Communications Director, at 202-618-6430 or abecker@bettermarkets.org

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