Letter to the Hon. Jerome Powell, Chair of the Federal Reserve, and the Hon. Jelena McWilliams, Chairman of the Federal Deposit Insurance Corporation - Waters Writes to Prudential Regulators on Proposed SunTrust/BB&T Merger

Letter

Dear Chairman Powell and Chairman McWilliams:

I write to express my concerns with the proposed merger between BB&T and SunTrust. The proposed merger raises many questions and deserves serious examination from banking regulators, Congress and the public to determine its impact and whether it would create a public benefit for consumers. I urge your agencies to provide a high degree of scrutiny of this proposed merger of what could become the sixth largest bank in the United States. This level of review is critical, even if it means taking more time to conduct the appropriate due diligence and ensure all affected stakeholders have an opportunity to be heard. To that end, while I appreciate the Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation's (FDIC) efforts in conducting two public hearings in Charlotte, North Carolina, and Atlanta, Georgia, as well as extending the public comment period,[1] your agencies should hold additional public hearings in other states that would be affected by the proposed merger to ensure the agencies have a wide range of perspectives before making a decision on the merger application.

According to SunTrust, they currently have branches in Alabama, Arkansas, District of Columbia, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, and Virginia.[2] The bank provides a range of products and services, including commercial banking, consumer banking, consumer lending (HELOC, credit card), private wealth management and retail mortgage to consumers in these states. The bank also provides products and services across the country, including corporate and investment banking, commercial real estate, consumer lending, specialty private wealth management, and correspondent mortgage.[3] As of December 31, 2018, SunTrust had more than $215 billion in total assets.[4]

According to BB&T, they currently have a presence through branches and ATMs in Alabama, District of Columbia, Florida, Georgia, Indiana, Kentucky, Maryland, North Carolina, New Jersey, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia.[5] BB&T has several national businesses, such as insurance and corporate banking, as well as traditional retail and consumer finance products and services it offers its customers.[6] As of December 31, 2018, BB&T had more than $225 billion in total assets.[7]

The proposed merger is simply not between two small banks located in Georgia and North Carolina, but rather between two of our largest banks with a presence in numerous states and products and services being offered across the country. In fact, if the merger is approved, it would create the largest bank the FDIC has ever supervised as the primary Federal regulator. Certainly, two public hearings are insufficient for the agencies to fully understand what the ramifications will be for millions of Americans.

In addition, the proposed merger was announced less than a year following the enactment of S. 2155 by the last Congress, a bill that I warned was a broader deregulatory giveaway to the largest banks instead of being focused on sensible improvements for community banks, as the proponents of the bill argued. Experts noted the legislation would likely incentivize bank mergers and accelerate industry consolidation,[8] making it more difficult for community banks to compete on a level playing field.[9]

There are also concerns that have been raised about regulators rubber-stamping prior merger and acquisition applications. For example, based on data provided by the Federal Reserve,[10] from January 1, 2006 through December 31, 2017, over 3,800 merger applications were submitted to the agency. During this eleven-year period, however, the Federal Reserve did not reject any merger application.

There are also many questions about how this proposed merger could specifically impact employees, branches, consumers and communities. For example, it has been reported that the banks will cut costs by closing branches, and that roughly 740 of their branches are within 2 miles of each other. Lesley Weaver, attorney for the National Black Farmers Association, explained at the first public hearing that branch closures in rural areas would hurt black farmers, noting, "Increased market concentration leads to worse economic terms for bank customers."[11]

Given these concerns, please detail your reaction to Ms. Weaver's comment and how this proposed merger could adversely impact consumers' access to affordable financial products and services; possible Community Reinvestment Act implications within rural and underserved markets; and exploring how both agencies are evaluating adequate remedies for employees affected by lay-offs. Please also schedule additional public hearings in other states that would be affected by this merger to hear from a larger group of stakeholders given its significant potential impact.

Finally, the proposed merger warrants serious scrutiny from Congress. This is especially true given the rubber-stamping bank merger applications receive from regulators as demonstrated by the recent data regarding the Federal Reserve's reviews. As the Committee intends to conduct thorough oversight of this merger, including holding our own public hearings on the matter, I respectfully ask that your agencies defer any final decisions on the merger application until after the Committee completes a full and thorough review of the proposed merger.

Thank you for your attention to this urgent matter. I look forward to your prompt written response by May 15, 2019.

Sincerely,

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