Waters Applauds President Biden's Executive Order to Examine Bank Merger Practices, Urges Federal Reserve to Strengthen Merger Reviews

Statement

Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, released the following statement on President Biden's recent executive order encouraging the Department of Justice and prudential regulators to examine bank merger practices.

"I am very pleased that President Biden took the important step of encouraging the Department of Justice and relevant regulators to robustly scrutinize bank mergers -- something I urged the President to do shortly after the election.

"The Federal Reserve's bank merger review guidelines have not been updated since 1995. Yet as the President's executive order makes clear, banking industry consolidation has increased considerably since then, with thousands of branch closures, and harmful repercussions for consumers, small businesses, and communities of color. President Biden's executive order alludes to the fact that banking agencies have not blocked a bank merger in 15 years, suggesting the process has become a rubber stamp. Further underscoring this point, one of the specific mergers that I mentioned in my December letter to President Biden -- PNC's acquisition of BBVA's U.S. assets -- was recently approved by the Fed without holding a public hearing on the application, creating the fifth largest commercial bank in the U.S. It is concerning that mergers and acquisitions of this size have been quickly waved through in recent years with limited opportunities for the public, including affected workers, consumers, and small businesses, to speak directly to Fed officials through hearings convened by the Fed.

"The Fed should review its outdated bank merger guidelines and carefully scrutinize concentration among large regional banks, especially in light of recent deregulation among that same group of banks, and the significant threats that concentration poses to our economy coming out of the pandemic. In recent years, we have seen major consolidation among large banks make markets less competitive, from Atlanta, Georgia to Traverse City, Michigan, as well as acquisitions by global systemically important banks that undermine financial stability. Unless the Fed updates the factors it takes into account when evaluating mergers to reflect the transformation in the financial sector that has occurred since 1995, it will not be able to properly assess which mergers serve the public interest and which do not.

"At a hearing with the prudential regulators in May, and in a letter today, I expressed my alarm at a recent report that indicated that the Federal Reserve is considering further weakening its standards for scrutinizing bank mergers. I urge Chair Powell and the leaders of the other banking agencies mentioned in President Biden's executive order to heed the President's encouragement and move swiftly in the opposite direction."

On December 4, 2020, Chairwoman Waters sent a letter to then President-Elect Joseph R. Biden urging his Administration to strengthen the merger and acquisition and anti-trust review processes.

On May 19, 2021, Chairwoman Waters expressed alarm at a recent report that the Fed was rolling back bank merger review during her statement at a full Committee hearing entitled "Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions."

On July 14, 2021, Chairwoman Waters encouraged Chair Powell to strengthen the Fed's "outdated approach to bank mergers" during her opening remarks at a full Committee hearing entitled "Monetary Policy and the State of the Economy."

On July 15, 2021, Chairwoman Waters sent the following letter to Chair Powell urging him to heed President Biden's encouragement to conduct more robust scrutiny of bank mergers, and pushing back against a recent news story indicating that the Fed planned to further weaken its approach to mergers.

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