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February 10, 2023

Regulators Must Scrutinize Bank Mergers More Thoroughly to Lower Systemic Risk

WASHINGTON, D.C.—Stephen Hall, Legal Director and Securities Specialist, issued the following statement in connection with the release of a fact sheet on bank mergers ahead of an OCC symposium at which Better Markets’ Tim Clark will participate in a panel addressing the effect of bank mergers on financial stability.

“The dramatic increase in the largest, too-big-to-fail (‘TBTF’) banks over the last two decades raises a host of concerns, and chief among them is the threat they pose to the financial system, the economy, and the standard of living for every American. That threat became a reality in 2008 when a deep and prolonged financial crisis nearly destroyed our financial system and plunged our economy into the worst downturn since the Great Depression, ultimately costing over $20 trillion.

“As banks attain “too-big-to-fail” status, often through mergers, they stand to be bailed out by U.S taxpayers rather than allowed to fail and go bankrupt like virtually every other business in America.  This special carve-out from the most basic rules of capitalism not only creates indefensible moral hazard but allows those banks to shift the costs of their reckless or illegal conduct to the public. It is the worst example of privatizing gains and socializing losses.

“In addition, the creation of ever-bigger banks can lead to a reduction in the availability of consumer banking products and services, increased costs to customers, or a complete loss of access to banking when bank branches are closed. That forces some to turn to even more costly and predatory financial services such as check cashers or payday lenders.   Small business lending also suffers as the footprint of the larger banks increases.

“For all of these reasons, the current process used by the banking regulators to review applications from banks seeking to acquire or merge with other banks must be substantially improved.  As we explain in our fact sheet, those agencies—the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (“FDIC”)—must update and strengthen their merger review process to more fully account for the risks to financial stability and the potential harm to consumers that mergers pose. Otherwise, this trend of basically unchecked consolidation within the banking system will continue, increasing the threat to our financial system and further harming consumers.”

You can find the Fact Sheet here, and learn more about the symposium here.


Better Markets is a non-profit, non-partisan, and independent organization founded 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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