WASHINGTON, DC – Congressman Scott Fitzgerald’s (WI-05) Bank Competition Modernization Act, legislation to modernize the outdated bank merger review standards, passed the House Financial Services Committee today. Specifically, the bill creates a $10 billion asset threshold, adjusted for growth in nominal GDP, under which federal banking regulators provide a safe harbor from the Department of Justice’s (DOJ) competition analysis, allowing small community banks to grow and achieve operational efficiencies without the delays associated with the DOJ’s competition review.
“The current one-size-fits-all approach can slow consolidation that strengthens smaller banks and reduces the ability of these institutions to serve their communities effectively,” said Congressman Scott Fitzgerald. “Mergers among smaller banks can promote efficiency and allow institutions to achieve economies of scale. This bill enables cost savings that benefit consumers in their own community.”
“H.R. 5262 would provide that a banking agency may, at its discretion, choose to not request a DOJ competitive analysis of a merger or acquisition application that would result in a bank with assets of less than $10 billion. This would be a welcome change, as a DOJ competitive analysis may create a prolonged delay in the approval of merger applications,” said Independent Community Bankers of America President and CEO Rebeca Romero Rainey. “Community bank mergers often result in more efficient institutions that are able to serve their communities more effectively.”
BACKGROUND: Under federal banking law, bank regulators review proposed mergers and acquisitions for a variety of factors including financial stability risk and anti-money laundering compliance, while the DOJ evaluates the competitive effects. Currently, all bank mergers trigger a review by the DOJ, regardless of the size of the institutions involved. This process can be time-consuming and burdensome, particularly for smaller banks, even when the merger would have minimal impact on competition.
SUPPORTERS: Independent Community Bankers of America (ICBA) and the Conference of State Bank Supervisors (CSBS).
Read the bill text here.
