Independent Banker - September 2023 - 37

As the DOJ and banking agencies reevaluate
the current, restrictive M&A framework,
ICBA will continue to urge the adoption of ...
policy changes and the modernization of
the existing framework.
¡ Scrutinizing the impact of credit
union bank acquisitions due to lack
of Community Reinvestment Act
(CRA) accountability
¡ Measuring concentration beyond
geographic boundaries such as
fintech companies, large banks that
lend nationwide, online lenders
that compete with community
banks and farm credit associations
to ensure it reflects the realities of
the current market and preserves
competition. Acting comptroller
of the currency Michael Hsu also
reiterated his previous calls to
update the framework in February,
citing concerns over diminished
competition and increased systemic
risk if the rules don't evolve with
the marketplace.
The DOJ invited comments on
its Bank Merger Guidelines in 2020
and again in 2021 after President
Joe Biden issued an executive order
calling for an update of bank merger
guidelines. The FDIC also published
a request for information in 2022
seeking comments on the bank
merger regulatory framework.
Agency leaders' demonstrated
interest in revisions to the bank
merger framework, coupled with a
framework that has not been updated
in nearly 30 years, suggests more
concrete proposals to modernize
bank merger regulations could be
forthcoming.
As the agencies review public
comment and evaluate possible
changes to the framework, ICBA
encourages the FDIC and the DOJ
to coordinate with the Office of the
Comptroller of the Currency (OCC)
and the Board of Governors of the
Federal Reserve System to revise
the framework based on three
key principles:
¡ Promote a competitive playing field
among banks of all sizes, credit
unions, nonbank fintechs and farm
credit associations
¡ Prohibit " too big to fail "
bank monopolies
¡ Make it quicker and easier
for small bank mergers that
strengthen local communities
with a continued community
bank presence, including rural
and low-to-moderate income
(LMI) communities
ICBA recommendations
for bank M&A updates
ICBA has written comment letters
offering suggestions for furthering these
goals. They include:
¡ Creating a small bank de minimis
exception where small banks benefit
from shorter review time frames
and those with less than $1 billion
in assets are presumed not to create
monopolies or anticompetitive effects
¡ Assessing whether mergers involving
banks with $100 billion or more in
assets pose systemic risk or are too
big to fail
¡ Giving credit unions and the Farm
Credit System the same weight as
bank competitors when assessing the
competitive landscape
¡ Excluding community bank merger
applicants from a higher burden of
proof or a formalized consultation
with the Consumer Financial
Protection Bureau (CFPB) to
evaluate convenience and needs
As the DOJ and banking agencies
reevaluate the current, restrictive
M&A framework, ICBA will continue
to urge the adoption of these policy
changes and the modernization of the
existing framework.
At a time when community banks
face increasing pressures of regulatory
compliance while squaring off against
competitors with far less regulatory
scrutiny, community banks should be
permitted to scale up and compete
without undue scrutiny or restrictions
on merger activities caused by an
outdated merger framework. It's
an issue of fair competition-one
that preserves consumer choice and
access to community banks that are
vital to local economies throughout
the nation.
ICBA will continue to closely
monitor progress on this issue and
remain a strong advocate for revising
the M&A framework in a way that
strengthens the community banking
industry and Main Street America.
Jenna Burke (jenna.burke@icba.org)
is ICBA's executive vice president
and general counsel, government
relations & public policy
independentbanker.org // 37
http://www.independentbanker.org
Independent Banker - September 2023

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