Senator Elizabeth Warren has criticized the Federal Reserve and the Office of the Comptroller of the Currency (OCC) for relying on outdated criteria to evaluate bank mergers, specifically in relation to Capital One's proposed acquisition of Discover Financial Services [3d8cd8f1]. Warren argues that this failure to modernize the review framework poses risks to economic stability and the livelihoods of working families [3d8cd8f1]. She noted that while the FDIC updated its merger guidelines in September 2024, the OCC's recent guidance does not adequately address the complexities of contemporary banking and falls short of a 2021 White House directive aimed at revamping financial services deal assessments [3d8cd8f1].
The FDIC is currently proposing new policies for bank mergers in response to instability affecting midsize lenders, following criticism of its handling of mergers after significant bank failures in 2023 [02920e2a]. This proposal has garnered attention from various stakeholders, including Senator Warren, who has expressed concern over large banks acquiring failed institutions, such as JPMorgan Chase's acquisition of Signature Bank [02920e2a].
FDIC board member Rohit Chopra has committed to a more stringent review process for merger applications, emphasizing the need for thorough scrutiny [02920e2a]. Meanwhile, Treasury Secretary Janet Yellen has indicated a willingness to consider mergers among regional banks that are under financial pressure [02920e2a]. Despite complaints from bank executives about the slow approval process for mergers, which they claim has hindered healthy banks from pursuing consolidation, the proposal is expected to face opposition from Republican members of the FDIC board [02920e2a].
The OCC's approval of the merger between New York Community Bank and Flagstar Bank in 2022, despite concerns over NYCB's exposure to commercial real estate, highlights the ongoing complexities in the regulatory landscape [02920e2a]. The FDIC's approval of NYCB's takeover of Signature Bank in 2023 further illustrates the evolving dynamics of bank mergers [02920e2a]. The combined entity reported a surprise loss in January and received a $1 billion capital infusion this month, raising questions about the long-term viability of such mergers [02920e2a].