September 30, 2021

Senator Warren and Rep. Chuy García Introduce the Bank Merger Review Modernization Act to End Rubber Stamping of Bank Merger Applications

Of the 3,819 bank merger applications the Fed received between 2006 and 2017, it did not decline a single one

Bicameral legislation would require bank regulators to seriously consider how the merger affects consumers and communities and whether it presents risks to financial stability 

One Pager (PDF) | Bill Text (PDF)

Washington, DC – United States Senator Elizabeth Warren (D-Mass.), a member of the United States Senate Banking, Housing, and Urban Affairs Committee (BHUA), and Representative Jesús “Chuy” García (D-Ill.), member of the House of Representatives Committee on Financial Services, today announced the reintroduction of the Bank Merger Review Modernization Act. The legislation would restrict harmful consolidation in the banking industry and protect consumers and the financial system from “Too Big to Fail” institutions, like those that caused the 2008 financial crisis. The bill comes on the heels of President Biden’s recent competition executive orders which call for increased merger oversight. 

“In recent years, our banking sector has become more and more dominated by the largest banks. Community banks are being gobbled up by larger competitors or forced to shut down because they can’t compete on a level playing field. This results in more concentration, higher costs for consumers, and increased systemic risk to our financial system. The bill Congressman García and I are reintroducing would ensure that regulators do their jobs by stopping mergers that deprive communities of the banking services they need and help prevent another financial crisis,” said Senator Warren.  

“Bank consolidation means more pay and profits for big banks and fewer bank branches in neighborhoods like mine. It’s time for our government to stop rubber stamping bank mergers,” said Congressman Jesús “Chuy” García. “This bill ensures our regulators consider the impacts of a merger on consumers, workers, and our financial system.”

Before banks merge, they need approval from federal regulators, including the Federal Reserve (“Fed”), the Federal Deposit Insurance Corporation (FDIC), or the Office of the Comptroller of the Currency (OCC). The review process for bank mergers, however, is fundamentally broken. Voluntary bank mergers have driven a rapid decline in the number of banks from over 12,000 in 1990 to less than 5,000 today. Studies show that bank mergers can result in higher costs to consumers and decreased access to financial products, particularly in low- and moderate-income communities. And when two large banks merge, it poses even greater risks for the economy, potentially creating a bank that’s too big to manage effectively or one that’s “Too Big to Fail,” threatening the stability of our financial system.


When regulators consider a merger, they are supposed to evaluate a number of factors, including: (1) whether the merger will create local monopolies for banking services; (2) whether the merged bank will be well managed; (3) whether the new bank creates risk to the financial system; and (4) the merger’s effects on the public, including consumers. In practice, however, financial agencies almost exclusively focus their analyses on narrow measures of competitiveness that fail to account for the broader impacts of the merger and often pre-review the merger in secret with banks before they announce it publicly. As a result, the merger review practice lacks analytical rigor, and regulators serve as rubber stamps. Of the 3,819 bank merger applications the Fed received between 2006 and 2017, it did not decline a single one.

Less than two years ago, regulators approved the merger of BB&T and SunTrust, creating the sixth- largest bank in the United States and the first new Too Big to Fail Bank since the financial crisis. Research has shown that this merger has not resulted in the promised benefits to low-income and minority communities.

It’s time to stop rubberstamping bank mergers at the expense of consumers, communities, workers and the financial system. The Bank Merger Review Modernization Act would strengthen the statutory framework under which bank and savings and loan holding company mergers are evaluated by:

  •  Guaranteeing that the Merger is in the Public Interest. The legislation clarifies and strengthens the public interest aspect of the merger review by:
  • Requiring Consumer Financial Protection Bureau approval when at least one applicant offers consumer financial products;
  • Strengthening the Community Reinvestment Act (CRA) by only allowing institutions with the highest rating in two out of three of their last CRA exams to merge; and
  • Requiring transparent disclosure of discussions between the institutions and regulators before the merger application is filed.
  • Safeguarding the Stability of the Financial System. The legislation requires regulators to use a quantifiable metric developed by the Basel Committee on Banking Supervision to evaluate systemic risk. The score is based on the size, interconnectedness, substitutability, complexity, and cross-jurisdictional activity of the institution.
  • Requiring that Regulators Examine the Anticompetitive Effects on Individual Banking Products. The legislation requires regulators to examine how the merger would impact market concentration for individual banking products, such as commercial deposits, home mortgage lending, and small business lending in addition to the general availability of banking products in local markets. Regulators would also be required to evaluate a number of other factors when evaluating competitiveness, including whether the merger would result in diminished product quality or the potential exploitation of consumers’ data.
  • Ensuring that the Merged Bank has Adequate Financial and Managerial Resources. The legislation requires regulators to review the leadership of the merged institution to ensure that the selected individuals have strong records with respect to risk management. Larger institutions would also have their balance sheets examined to ensure that they will be on solid financial footing.

The Bank Merger Review Modernization Act has been endorsed by Jeremy Kress, former Federal Reserve Board attorney and Assistant Professor of Business Law at the University of Michigan; the National Community Reinvestment Coalition (NCRC); Americans for Financial Reform; the Institute for Agriculture and Trade Policy; Communications Workers of America; the Institute for Local Self-Reliance; 20/20 Vision; Public Citizen; and Food & Water Watch.


"This bill is a long overdue step to ensure that bank mergers are good for the public," said Jesse Van Tol, President and CEO of the National Community Reinvestment Coalition (NCRC). "For decades, federal bank merger law has recognized that there must be a public benefit in terms of increased access to affordable credit. This bill finally spells out what banks must do to meet that requirement. Mergers should not be approved by regulators if the only benefit is a bigger and more profitable bank. However, the implementation of the public benefit requirement has been uneven. We support Senator Warren’s bill because it puts teeth into the public benefit requirement by mandating that merging banks submit a public benefits plan. The plan must contain measurable goals for increasing loans, investments and services in underserved communities. The bill will also help reduce racial inequality by ensuring that banks are more accountable to the communities they serve, and it toughens antitrust enforcement."

For too long, regulators' lax oversight of bank mergers has hurt consumers, small businesses, and local economies. By requiring regulators to prioritize the public interest in merger reviews, this bill would prevent harmful consolidation, protect bank customers, and safeguard the stability of the financial system.”- Jeremy Kress, former Federal Reserve Board Attorney and Assistant Professor of Business Law at the University of Michigan

"For decades, antitrust and banking regulators have waved through bank mergers that created a cluster of Wall Street behemoths and large regional banks that have raised prices for consumers and small businesses and reduced access to banking services in communities of color. And the merger wave is continuing. This legislation would make vital changes to the bank merger approval process to end the rubber-stamping of mergers that would produce ever more powerful megabanks that can threaten financial stability and harm consumers."- Renita Marcellin, Senior Policy Analyst at Americans for Financial Reform

Senator Warren has a strong record of questioning Too Big to Fail banks and the regulators who enable them:

  • Last month, at a BHUA hearing, Senator Warren raised concerns to federal regulators regarding the insufficient process in place to review bank mergers, which has resulted in no formal bank merger denials in 15 years. 
  • Last year, Senator Warren wrote to the Department of Justice, urging them to strengthen the Bank Merger Competitive Review guidelines to protect consumers rather than weakening the already insufficient process currently in place. 
  • In February 2019, following the announcement of the merger proposal between BB&T and SunTrust, Senator Warren wrote to Chairman Powell asking about the proposed merger’s effect on consumers.
  • She also raised questions with Chairman Powell during a February 2019 Senate Banking, Housing, and Urban Affairs Committee hearing about closed-door discussions that take place before a merger application is filed. As a result, the Fed announced that it would hold two public forums to get public input on the BB&T and SunTrust merger.
  • In response to a letter Senator Warren wrote in April 2018 to Chairman Powell and then Attorney General Jeff Sessions in the wake of the passage of the Bank Lobbyist Act (S. 2155), which the senator correctly assumed would catalyze mergers among large banks, Chairman Powell admitted that no merger applications had been declined since 2006, though a handful had been withdrawn. Chairman Powell’s letter also revealed that in considering a merger application, the Fed largely looks at whether the merger would create monopolies for the merged bank in any market.