OCC sees need for regulatory reform in bank merger process

Federal regulators need to build a better mousetrap to ensure that “healthy” bank mergers get approved while “unhealthy” mergers are rejected, an Office of the Comptroller of the Currency official said today during an agency symposium on the topic. OCC Chief Counsel Ben McDonough—delivering prepared remarks on behalf of Acting Comptroller Michael Hsu, who wasn’t able to attend—reiterated the agency leadership’s belief that the framework for analyzing bank mergers needs updating. Multiple bank industry and policy experts spent the day sharing their research and thoughts on mergers.

“There is a robust ongoing debate about the effects of bank mergers on competition, on U.S. communities, and on financial stability,” McDonough said. “At the same time, many experts have raised questions about the ongoing suitability of the current bank merger standards at a time of intense technological and societal change.”

McDonough added that without regulatory reform, “there is an increased risk of approving mergers that diminish competition, hurt communities or present systemic risks. By the same token, a moratorium on mergers would lock in the status quo and inhibit growth and improvements that could help communities and increase competition.” He did not provide any examples of regulatory reforms the OCC would pursue, saying the symposium was instead meant to advance discussion. “In our experience, sometimes it takes in-person exchanges of ideas to spur us to action,” he said.