Republican lawmakers in the House and Senate have introduced legislation to overturn a 2024 final rule updating the process the Office of the Comptroller of the Currency (OCC) uses to review proposed bank mergers.
With the rule’s adoption in September last year, federal banking regulators discontinued the practice of automatically approving merger applications 15 days after the conclusion of the comment period, barring an action to remove the filing for expedited processing. The rule also amended regulators’ method for determining financial stability, financial and managerial resources, future prospects, and convenience and needs factors.
The adoption of the final rule corresponded with the Federal Deposit Insurance Corp.’s (FDIC) 3-2 vote to adopt a final statement of policy (SOP) on bank merger transactions, which was met with mixed reactions from the financial services industry at the time. The updated policy statement was intended to address the scope of transactions subject to FDIC approval, as well as the merger application evaluation process and certain principles used to deter applicable statutory considerations under the Bank Merger Act (BMA).
Rep. Andy Barr (R-Ky.) and Sen. John Kennedy (R-La.) introduced companion resolutions invoking the Congressional Review Act in their respective chambers, seeking to nullify the OCC final rule and prohibit the agency from issuing merger regulations without congressional authorization.
“Mergers increase competition and make our banking system more dynamic,” Barr said in a press release. “By allowing banks to realize economies of scale and pass cost savings on to consumers, these acquisitions result in better rates, lower fees, and expanded access to credit — especially in underserved communities. The Biden administration’s OCC injected politics into the merger process, discouraging responsible growth.”
Both lawmakers argued the OCC’s final rule will lead to consolidation within the banking system and amounted to a form of regulatory overreach.
“Big government shouldn’t stand in the way of healthy bank mergers that occur in the free market and serve consumers and job creators,” Kennedy said. “In order to stabilize the banking industry and protect the Americans who depend on strong banks, Congress should quickly reverse the Biden administration’s bureaucratic rule.”
The legislators’ comments align with views expressed by retail banking industry advocates when the OCC adopted in the final rule in September last year.
Citing the restrictions imposed by the rule, Consumer Bankers Association President and CEO Lindsey Johnson said it “undermines banks’ ability to grow, innovate, and better serve their customers in an increasingly competitive global market.”
Community banking advocates offered a different perspective on the matter, urging banking regulators to address the increasing prevalence of banks being acquired by credit unions. In its SOP, the FDIC noted that “multiple commenters discussed a need to increase the scrutiny applied to acquisitions of banks by nonbanks such as credit unions.”
With the OCC’s latest announcement about its intent to combine its bank supervision units into one, the Independent Community Bankers of America issued a statement urging the agency to consider maintaining a separate arm focused on community banks. The trade group contended “it is counterintuitive to consolidate supervisory approaches across institutions with vastly different business models and risk profiles.”