Brown Asks Fed and OCC to Review Bank Mergers

Senator Sherrod Brown (D-Ohio), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, recently sent a letter to Federal Reserve Chair Jay Powell and Acting Comptroller of the Currency Michael Hsu, pushing them to join the Federal Deposit Insurance Corporation (FDIC) in making sure bank mergers serve families and communities instead of corporations. 

“The federal banking agencies must all adopt a posture toward bank merger reviews that prioritizes competition, financial stability, and the needs of working families and small businesses,” he wrote. 

American Banker highlighted that Brown asked the Fed and the Office of the Comptroller of the Currency (OCC) to “review and reconsider” the current approach to approving large bank mergers so they benefit families, communities, and small businesses, arguing that in most industries, consolidation has increased prices for consumers and undercut worker bargaining power. 

Consolidation has caused the biggest banks to grow even bigger at the expense of small businesses and consumers with less access to affordable financial services, Brown argued. For small businesses, lending becomes more difficult because available loans become more expensive. 

“In the aftermath of a merger, the rates banks pay depositors go down, while the rates and fees banks charge borrowers go up,” the letter reads. “Bank branches invariably close, making it harder for consumers to access financial services in their neighborhoods.”

Brown urged the agencies to adopt a framework to review bank mergers that reflects the current banking landscape and understands how concentration hinders competition. The Bank Merger Act requires regulators to consider how a transaction could leave businesses or consumers outside the banking system, but agencies have skirted around this requirement for years. 

“I applaud the efforts of the FDIC Board to seek comment on the effectiveness of its bank merger framework,” Brown wrote. “I am also encouraged by the Justice Department’s recent request for public comment on how it might revise its Bank Merger Competitive Review Guidelines. The Fed and OCC must follow their lead.”