ABA to DOJ: Bank Merger Guidelines Outdated

The American Bankers Association told the Department of Justice today that the 1995 bank merger competitive review guidelines are outdated and do not take into account the competitive effects of online banking and competition from nonbanks.

Responding to a request for public comment from the DOJ, the association said under current application of the guidelines, small institutions may be prevented from merging if the government assumes they are the only competitors in their geographic markets, which fails to reflect online channels and financial services that do not depend on physical branch networks.

ABA said that the 25-year-old guidelines fail to reflect the “tremendous changes” the market for financial products and services has undergone, including use of online banking, the interstate expansion of bank branch networks, enhanced market access made possible by advertising and communication innovations, and the increased market presence of nonbank financial firms, including fintech firms.

The association added that a review of the guidelines “is important to the health of the U.S. financial system and economy” and that competitive impact analysis should take into account financial services provided to a market through channels other than branch networks, and by nonbank firms.