News Release: Affirmation of DOJ Role in Bank Mergers a Welcome Change


June 21, 2023

Carter Dougherty
(202) 251-6700

Affirmation of DOJ Role in Bank Mergers a Welcome Change

Washington, D.C. The announcement by Assistant Attorney General Jonathan Kanter that the Department of Justice is willing to block bank mergers even after they have been approved by their primary regulators represents a welcome sea change after decades in which government authorities waved through consolidation in this industry.

“Justice has long been deferential to banking regulators, who have been too deferential to bankers wishing to consolidate,” said Alexa Philo, senior policy analyst at Americans for Financial Reform Education Fund. “That is now changing, although authorities still need to hammer out a set of pro-competition bank merger guidelines.”

Speaking on the 60th anniversary of U.S. vs. Philadelphia National Bank, the landmark Supreme Court decision that upheld DOJ’s authority to enforce antitrust laws in banking, Kanter noted that “bank competition affects the interest you earn on your savings account, the monthly payment on your mortgage or on your car loan and the fees you pay to withdraw cash from an ATM, the variety of financial products that you can choose from and whether your business can get an affordable loan. Simply put, bank competition affects people’s pocketbooks and their daily lives.”

As Kanter also noted, the Biden administration has encouraged the DOJ and Federal Banking agencies to revitalize bank merger oversight to “ensure Americans have choices among financial institutions and to guard against excessive market power.”

AFR and allied groups have repeatedly called on bank regulators – the Federal Reserve, the Federal Deposit Insurance Corporation, and the Comptroller of the Currency – to complete the revision of bank merger guidelines that date from the mid-1990s. Regulators started the process in late 2021 but have not finished the job.

Already dangerous levels of bank consolidation in America have only grown with the decades-long trend in bank mergers, with harmful effects on consumers and small businesses, especially those in communities of color, including more evictions, increasing rates of debts in collection, and fewer loans supporting economic development. This hands-off approach to bank mergers has caused visible damage to communities, including banking deserts, limited options for mortgages and even affordable bank accounts, and reduced loans to small businesses.

As part of the shift announced by Kanter:

  • The DOJ will no longer limit its review to the local market. A more fulsome approach will be taken, including reviewing fees and other products when determining anti-competitive effects of mergers.
  • The DOJ will return to the previous practice of sending the banking agencies an anti-competitive factors report.
  • The DOJ will no longer be taking a leading role in negotiating divestitures with merging banks to mitigate anti-competitive concerns.