Market Watch | Steve Gelsi | Sep 30, 2022

Fed’s Merger Guidelines ‘Ripe for Review’

• Federal bank regulators continue to signal they’re on a path to update bank-merger guidelines that have been in place since 1995 in light of how the competitive marketplace has changed over the years.

See:  CMA reports on the state of competition in the UK

• In at least three key speeches in September, banking regulators have spoken about bank mergers. The most recent was an address on Wednesday by Michelle Bowman, a member of the Fed’s board of governors.
• Michael Barr, the Federal Reserve’s vice chair for supervision, said in a Sept. 7 speech that he’s working to assess how the central bank performs merger analysis and where it could improve.
• “A merged institution may be able to provide more competitive products and services, but it could also have the potential to reduce competition and access to financial services in a geographic area by raising prices, narrowing the range of services offered, and reducing the supply of small business or community development loans that rely on local knowledge,” he said.

More input required

• The Justice Department has been seeking public input on whether it should update its standards for assessing proposed bank mergers under U.S. banking and antitrust laws. The Fed must also weigh in as part of the overall process.
• Along with bank mergers, the Justice Department is looking at updating rules about mergers and acquisitions more broadly. In a July 2021 executive order, President Joe Biden urged the FDIC and other federal agencies to review current practices and adopt a plan “for the revitalization of merger oversight.”