Warren and representative Chuy Garcia argue bank merger process is ‘fundamentally broken’
Sen. Elizabeth Warren, D-Mass., & Rep. Jesus “Chuy” Garcia, D-Ill., re-introduced a bill Thursday that would speed up an investigation into a proposed merger between the nation’s biggest banks, the latest in a series of moves. Federal lawmakers crack down on business practices they see as detrimental to competition.
Warren and Garcia argue that the current review process for bank mergers is “fundamentally broken,” with regulators acting as “rubber stamps” for institutions. Their law, called the “Bank Merger Review Modernization Act,” would require the Consumer Financial Protection Bureau to sign any merger in which at least one institution offers consumer financial products.
“Community banks are being swallowed up by larger competitors or forced to close because they cannot compete on an equal playing field,” Warren said in a statement. “The result is greater concentration, higher costs for consumers and increased systemic risk to our financial system.
McConnell blocks Schumer bid to raise loan limit on majority basis
“The bill Congressman García and I are re-introducing will ensure that regulators do their bit by preventing mergers that deny communities the banking services they need and help prevent another financial crisis,” he said.
The law would require regulators to use “quantitative metrics” to assess the systemic risk a proposed merger would take if the combined entity fails. This would require the merged banks to have “substantial financial and managerial resources” and for regulators to assess whether the merger would have a detrimental effect on the market for key consumer services such as home mortgage lending.
Two Democratic lawmakers originally introduced the law in 2019, though it failed to gain traction in the Republican-controlled Senate.
Get Granthshala Business on the go by clicking here
“Bank consolidation means higher salaries and profits for larger banks and fewer bank branches in neighborhoods like mine. It is time for our government to stop rubber stamping bank mergers,” Garcia said in a statement. “This bill ensures that our regulators consider the effects of the merger on consumers, workers and our financial system.”
In July, President Biden issued an executive order calling on federal lawmakers to take action that encourages market competition.