FDIC Advances Bank Merger Proposal

Source: American Banker

The Federal Deposit Insurance Corp. has set the wheels in motion to publish its request for information on bank merger policy, putting the policy fight that led to the resignation of former Chair Jelena McWilliams back on the front-burner and eliciting a new round of industry reaction.

On Friday the agency said it has sent its proposal to the Federal Register for publication and will allow 60 days for public comment. The FDIC board had approved the request for information in December, but it’s not official until published.

Since the board’s 3-0 vote in December, the agency conducted a final technical review before formalizing the request, according to FDIC staff. The vote occurred amid a power struggle between McWilliams — a Republican appointee — and Democrats on the board, including now acting Chair Martin Gruenberg and Consumer Financial Protection Bureau Director Rohit Chopra. McWilliams stepped down from the agency in February.

Among the questions raised by the FDIC in its request for information are whether regulators should give more consideration to financial stability risks posed by larger bank mergers, and whether the CFPB should have the power to weigh in on merger applications.

The document gives $100 billion as a hypothetical asset threshold that would trigger greater scrutiny: “Should the FDIC presume that any merger transaction that results in a financial institution that exceeds a predetermined asset size threshold, for example $100 billion in total consolidated assets, poses a systemic risk concern?”

The request also solicits feedback on whether agencies should rethink the way they consider if a merger would affect the convenience and needs of a community.