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Two leading federal bank regulators are at odds over whether a key step in reviewing how bank mergers are regulated can go forward.
A request seeking public comments about bank mergers that one government agency said had been approved by the Federal Deposit Insurance Corp. has come under dispute after the FDIC said it had not approved the document.
Rohit Chopra, director of the Consumer Financial Protection Bureau, said in a joint statement yesterday 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, issued the statement with Martin Gruenberg, another FDIC board member and former FDIC chairman.
“The Board of the Federal Deposit Insurance Corporation (FDIC) has approved a Request for Information and Comment on Rules, Regulations, Guidance, and Statements of Policy Regarding Bank Merger Transactions,” the joint statement said. “This marks the beginning of a careful review of the effectiveness of the existing regulatory framework in meeting the requirements of the Bank Merger Act. Effective implementation of the Bank Merger Act has deep implications for the safety and soundness, financial stability, community accountability, and competitiveness of the banking system. We strongly support this Request for Comment.”
Chopra also wrote about the request on the CFPB’s blog.
Later Thursday afternoon, the FDIC issued a statement saying the document posted on the CFPB’s website had not been approved by the FDIC.
“The FDIC has longstanding internal policies and procedures for circulating and conducting votes of its Board of Directors, and for issuing documents for publication in the Federal Register,” the FDIC statement said. “In this case, there was no valid vote by the Board, and no such request for information and comment has been approved by the agency for publication in the Federal Register.”
The FDIC board typically has five members, though currently the vice-chairman position is vacant. Michael Hsu, the acting comptroller of the currency, is another automatic member of the board. Chopra, Gruenberg and Hsu are Democrats while FDIC Chairman Jelena McWilliams is a Republican who was appointed to the position by then-President Donald Trump in 2018.
Some Republican members of Congress have criticized Chopra and Gruenberg. Sen. Pat Toomey, a Republican from Pennsylvania and the ranking member of the Senate Banking Committee, referred to their move as “an attempted coup” and an “unprecedented, illegitimate attempt to depose a bona fide and Senate-confirmed chairman.” He called on the Biden administration to “disavow this odious destruction of democratic norms.”
Bank mergers have been criticized by community groups for the effects that fewer branches and less competition have on communities. After the CFPB posted the joint statement yesterday, the National Community Reinvestment Coalition issued a statement supporting the request for information.
“Bank mergers are a privilege, not a right, and banks have unique responsibilities to provide public benefits to the communities where they do business,” NCRC CEO Jesse Van Tol said in the statement. “The merger reviews need to be updated to include more robust expectations regarding public benefits and convenience and needs of the communities to be served.”
