June 27, 2023

Senator Warren Urges Financial Regulators to Promote Greater Competition in Banking, Strengthen Bank Merger Review Guidelines

“I have long been concerned with bank concentration and your agencies’ failures to curb the proliferation of banks that are ‘too-big-to-fail.’”

Text of Letter (PDF)

Washington, D.C. – United States Senator Elizabeth Warren (D-Mass) sent a letter to Assistant Attorney General Jonathan Kanter, Federal Deposit Investment Corporation (FDIC) Chairman Gruenberg, Acting Comptroller of the Currency Michael Hsu, Federal Reserve Vice Chair for Supervision Michael Barr, and Treasury Secretary Janet Yellen, urging regulators to promote greater competition in the banking sector by toughening their stances on bank mergers and strengthening bank merger review guidelines.

Since March, the United States has seen the second, third, and fourth largest bank collapses in history. Yet in recent weeks, Secretary Yellen and Acting Comptroller Hsu have made public comments suggesting they would like to see more mergers and consolidation in the banking industry – increasing the risk of harm to consumers, small businesses, and financial stability.

“While your agencies are working to update the guidelines under which you evaluate bank mergers, which were last published in 1995,  the recent bank crisis underscores the urgency of strengthening the merger review process and reversing the dangerous trend of bank consolidation,” wrote Senator Warren.

In the letter, Senator Warren highlighted financial regulators’ failure to rein in the rapid consolidation in the banking industry, which has significantly reduced the number of small banks in the United States and facilitated the proliferation of “too-big-to-fail” banks that put taxpayers at risk. The Fed, in particular, “has approved more than 3,500 consecutive bank merger applications since 2006 without denying a single one” and just two years before its collapse, approved Silicon Valley Bank’s acquisition of Boston Private Bank and Trust.

“Not a single one of the federal banking agencies have formally denied a bank merger application in over 15 years, while DOJ has not challenged a bank merger in more than 35 years,” wrote Senator Warren. “Meanwhile, the number of commercial banks in the U.S. has fallen by 70% over the past two decades, and the trend is accelerating with $77 billion in bank mergers and acquisitions in 2021 alone – the ‘highest yearly deal volume since the 2008 financial crisis.’”

The letter also noted that this consolidation hurts consumers and small businesses, and goes against President Biden’s commitment to increasing scrutiny on big corporate mergers. Senator Warren is urging regulators to rein in bank consolidation and accelerate their work to update the bank merger review guidelines. 

“Allowing additional bank consolidation would be a dereliction of your responsibilities, hurting American consumers and small businesses, betraying President Biden’s commitment to promoting competition in the economy, and threatening the stability of the financial system and the economy,” concluded Senator Warren. “Shoring up our banking system will require stronger regulation and more vigorous oversight of big banks to keep them from failing in the first place, and stronger merger guidelines and rules that significantly check consolidation and limit the size and number of too big to fail banks that put taxpayers at risk.”

In order to better understand the work being done to update the bank merger guidelines, Senator Warren requested additional information from the regulators by July 10, 2023. 

Senator Warren is a leading voice on the financial system, advocating for critical regulations to protect consumers, the financial system, and the economy:

  • In June 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren warned of the dangers of growing concentration in the banking system and called on three nominees to the Board of Governors of the Federal Reserve System (Fed) – Dr. Phillip Jefferson, Dr. Lisa Cook, and Dr. Adriana Kugler – to institute the strongest possible bank merger guidelines and to reinstate tough financial regulations on big banks to protect consumers, the financial system, and the economy from serious risks posed by Too-Big-to-Fail banks.
  • On March 14, 2023, Senator Warren sent a letter to ex-SVB CEO Greg Becker, asking for answers about his and SVB lobbyists’ efforts to roll back Dodd-Frank rules prior to the collapse of the bank.
  • On March 13, 2023, Senator Warren published an op-ed in the New York Times calling Congress and federal regulators to strengthen weakened rules to avoid another crisis, intensify bank oversight, reform deposit insurance, and hold SVB executives accountable for any malfeasance or mismanagement that led to its failure.
  • On March 10, 2023, Senator Warren released a statement following the collapse of SVB.
  • In February 2023, Senator Warren delivered a speech at Open Markets Institute, urging regulators to put a stop to anticompetitive bank mergers and advance new bank merger guidelines. 
  • In September 2021, Senator Warren, along with Representative Jesús “Chuy” García (D-Ill.), reintroduced the Bank Merger Review Modernization Act to 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.
  • In August 2021,  at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, 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.
  • In October 2020, Senator Warren sent a letter to Assistant Attorney General Makan Delrahim, head of the Department of Justice (DOJ) Antitrust Division, to raise concerns that in updating its 1995 Bank Merger Competitive Review guidelines for the first time in 25 years, DOJ “seeks to weaken the already insufficient process currently in place to review bank mergers, making it even easier for these mergers to occur.”