Justice Department to Review Bank Merger Rules

The Justice Department on Friday announced it is accepting public comment on whether federal policy governing bank mergers should be updated.

Credit union mergers and credit union-bank mergers are not included in the request for information. However, the DoJ is asking whether regulators “give appropriate weight to credit unions and thrifts” in evaluating whether there is sufficient competition to allow a bank merger to go forward.

The DoJ announcement follows an attempt by Consumer Financial Protection Bureau Director Rohit Chopra to convince the Federal Deposit Insurance Corporation board to solicit comments on merger rules. FDIC Chairwoman Jelena McWilliams, who controls the FDIC agenda, last week refused to authorize the agency to request comment on the rules.

So, the DoJ has taken over.

“The Antitrust Division shares with its federal partners an interest in ensuring bank mergers do not harm competition and the competitive process,” Assistant Attorney General Jonathan Kanter of the Antitrust Division, said in announcing the review. “I commend Director Chopra for his leadership in this area and look forward to reviewing updated comments as the division undertakes this important review.”

The department first requested comment on the bank merger guidelines on Sept. 1, 2020. The request issued last week focuses on whether bank merger reviews are “currently sufficient to prevent harmful mergers and whether it accounts for the full range of competitive factors appropriate under the laws.”

As part of the review of a bank merger, regulators assess the financial services competition in the area the banks are located. Responding to the 2020 request, banking trade groups said that credit unions should be given the same weight as banks in any review of competition.

The review follows a July Executive Order issued by President Biden. The president urged federal regulators to revitalize efforts to ensure competition in myriad industries from aviation to agriculture. He urged banking regulators “to review current practices and adopt a plan, not later than 180 days after the date of this order, for the revitalization of merger oversight” under banking regulations.

The Independent Community Bankers of America and the American Bankers Association have gone further and called on Congress to examine the purchases of banks by credit unions. They contend that credit unions are capitalizing on their tax exemption in those purchases, which, they argue, decreases competition.


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