The Federal Deposit Insurance Corp. has moved forward with plans to review bank merger policies after an attempt late last year to address mergers led to controversy on the FDIC board.
The FDIC said in a statement Friday that it had issued a request for information on the Bank Merger Act. The agency is looking for information and comments regarding the regulatory framework for mergers, including laws, practices, rules, regulations, guidance and statements of policy.
The request is for transactions involving one or more insured depository institutions, the FDIC said, including mergers between an insured depository institution and a non-insured institution.
“Significant changes over the past several decades in the banking industry and financial system necessitate a review of the regulatory framework,” the FDIC said.
Once the request is published in the Federal Register, comments will be accepted for 60 days. The FDIC said it intends to use the information “to help inform the FDIC’s understanding and any potential policymaking in this area.”
A proposal to request public comments about bank mergers ended up sparking a controversy in the months leading up to Jelena McWilliams’ unexpected decision to resign as FDIC chairman.
Rohit Chopra, director of the CFPB, had said in a joint statement on Dec. 9 that the FDIC had approved a request for information on bank mergers. Chopra, who as CFPB director is automatically a member of the FDIC board, had issued the statement with Martin Gruenberg, another FDIC board member.
Later that afternoon, the FDIC released a statement saying it had not approved the document.
McWilliams wrote an op-ed the following week for the Wall Street Journal saying that she had told board members she would be willing to work with them on a document drafted by FDIC staff. McWilliams said the board instead voted on a document drafted by the CFPB.
McWilliams in the op-ed referred to the board members as attempting a “hostile takeover” of the FDIC. McWilliams ended up resigning effective Feb. 4, and Gruenberg, who had previously been FDIC chairman, is now the acting chairman.
In the request for information, the FDIC said the review of the Bank Merger Act was needed because of consolidation and growth in the banking industry over the past three decades that have led to fewer smaller banks and an increased number of “large and systemically-important banking organizations.”
The request for information also references President Joe Biden’s executive order for federal agencies to review the effects of consolidation on a competitive marketplace. Other reasons cited for the review include the financial stability factor that the Dodd-Frank Act added to the Bank Merger Act and promoting public confidence in the banking system.
“The FDIC has determined that it is both timely and appropriate to review the regulatory framework and consider whether updates or other changes are warranted,” the FDIC said in the request for information.
