Bank Regulators Focus on Financial Stability Factor to Reevaluate Large Bank Mergers

19 May 2022
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Key takeaways:
  • Bank regulators have recently engaged in steps to reconsider their historical review processes for mergers, citing, among other items, the financial stability factor added to the Bank Merger Act and the Bank Holding Company Act by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act as a basis for their current reform efforts.
  • Michael J. Hsu, the Acting Comptroller of the Currency, has pointed to a gap in resolvability for so-called “large regionals,” which are not subject to the heightened resolvability requirements that apply to the eight U.S. global systemically important banking organizations. He suggests that large regionals be subject to resolvability requirements similar to those applicable to the U.S. GSIBs, and he notes that the Office of the Comptroller of the Currency is contemplating conditioning approval of large bank mergers on “actions and credible commitments” with respect to such heightened resolvability requirements.
  • Hsu’s suggestions come on the heels of several recent developments related to bank mergers, including the Federal Deposit Insurance Corporation’s request for information soliciting comments regarding the regulatory framework governing bank merger transactions.