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March 1, 2024

NYC Bancorp’s Stunning Troubles Direct Result From Regulators Creating This Frankenstein Monster that Now Threatens Financial Stability

WASHINGTON, D.C.— Dennis Kelleher, Co-founder, President and CEO, issued the following statement in connection with the release of a Fact Sheet, New York Community Bancorp: A Frankenstein Monster Federal Regulators Created:

“Today, we are once again seeing New York Community Bancorp (NYC Bancorp) spiraling towards disaster with reports of material internal control weaknesses that delayed its 10-K filing, a departing CEO and board members, a plunging stock price, and a $2.4 billion impairment charge. Unfortunately, this situation was avoidable and is, in large part, a result of regulators creating a unique Frankenstein monster. Our fact sheet on the developing situation details the shocking process whereby federal banking regulators inexplicably approved multiple rapid-fire mergers, enabled irresponsibly fast growth with inevitable operational and risk deficiencies, overlooked and ignored regulatory arbitrage, and despite multiple serious discrimination and fair lending concerns.

“After trying and failing to get approval from the Federal Deposit Insurance Company (FDIC) and Federal Reserve (Fed), NYC Bancorp shopped for a more friendly regulator and found one at the Office of the Comptroller of the Currency (OCC), that simultaneously approved its acquisition of Flagstar Bank and Flagstar Bank’s acquisition of New York Community Bank (NYCB) on December 1, 2022. That merger ballooned Flagstar from $25 billion in assets to $90 billion in assets. With the ink barely dry on that merger, the banking regulators—just 100 or so days later—approved Flagstar’s acquisition of Signature Bank, causing its total assets to jump to $123 billion.

“At that point, the bank’s growth exceeded what was reported by all three of the 2023 regional banks in the years leading up to their failures. Over the course of just two quarters, the bank’s two acquisitions quadrupled its asset size and more than doubled its employee count.

“Allowing the creation of this Frankenstein monster by throwing together these three banks without any time to properly assess, manage, and integrate their operations, systems, controls, management, and other typical facets of post-merger activities was irresponsible and virtually guaranteed the problems that have materialized.  That and allowing a bank to switch regulators and receive a different decision on a merger application is wholly inappropriate. Adding insult to injury, the regulators also overlooked, ignored, or disregarded serious racial discriminatory conduct by merger participants on multiple occasions in approving the mergers.

“The American people deserve much better from their financial regulators, who should conduct a searching review of this process and take concrete action to ensure that it does not happen again.  The full details of that review and the actions taken should be publicly released, as happened with the failures of Silicon Valley Bank and Signature Bank.”

Learn more in our fact sheet.


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

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