News Release: OCC’s Modest Merger Proposal Falls Far Short


Jan. 31, 2024

Carter Dougherty

OCC’s Modest Merger Proposal Falls Far Short
No Substitute for Rebooting of Bank Merger Guidelines

Washington, D.C. – The minor changes proposed by the Office of the Comptroller of the Currency (OCC) to the bank merger review process fail to grapple with the harms of consolidation and are no substitute for a thorough rethinking of merger guidelines that have remained unchanged for the last three decades.

“The nearly 30-year-old bank merger guidelines desperately need more thorough revisions to confront the consolidated market power the megabanks wield over communities and consumers in need of affordable and accessible financial services,” said Alexa Philo, senior policy analyst at Americans for Financial Reform. “Regulators can’t paper over this problem with minor tweaks to existing practices.”

The OCC has proposed a new policy statement on the OCC’s merger review procedure and criteria. The regulatory changes would eliminate the current expedited and automated merger approval process and rescind a streamlined merger application used in these expedited reviews – a positive step. But the criteria the OCC proposes to assess the financial stability impacts of bank mergers do not confront the systemic risk problems created by banking behemoths that can be too-big-to-fail and effectively compel public backstopping of these biggest institutions in a crisis.

“Eliminating the automated bank merger approval process was long, long overdue,” said Patrick Woodall, senior fellow at AFR. “This proposal makes a necessary change, but there is much more to do, and the OCC and the other regulators have failed to move forward on these broader updates.”

Instead of updating the bank merger guidelines, the OCC is proposing a policy statement that sets the parameters for considering proposed mergers. But the statement merely codifies the current practices, which have failed to prevent anti-competitive banking mergers or hyper-consolidation in banking. Essentially, the policy statement would flag banks with troubled histories or supervisory records as less eligible for merger transactions. But insufficient enforcement in the last few decades means many banks have good enough supervisory records to avoid much scrutiny. 

For example, the proposal would raise concerns for mergers by banks with poor Community Reinvestment Act ratings. But only about two percent of banks receive these ratings, so almost no mergers would be stopped.