The Senate voted 52-47 along party lines to approve a
resolution overturning a final rule updating the process banking regulators use
when reviewing proposed bank mergers and acquisitions (M&A).
The Office of the Comptroller of the Currency (OCC)
finalized the rule in September 2024 with an effective date of Jan. 1. Shortly
after, the OCC and the Federal Deposit Insurance Corp. (FDIC) adopted a joint
final statement of policy (SOP) detailing updated principles and processes for
assessing transactions under the Banking Merger Act.
Two dissenting votes in the FDIC’s 3-2 decision to adopt the
SOP signaled a rift among federal regulators, as did the Federal Reserve’s
decision not to update its merger guidelines, which have remained unchanged
since 1995. The dissenters were FDIC Vice Chair Travis Hill and former FDIC Director
Jonathan McKernan – the Trump administration’s nominee to become the next
permanent director of the Consumer Financial Protection Bureau.
Among the notable changes promulgated by the rule was its elimination
of the longstanding expedited review procedure for applications that met
certain criteria regarding safety and soundness and regulatory compliance,
among other factors.
Under existing rules for M&A transactions, applications
meeting these criteria can be processed without a public comment period or a
full review. Barring an action to remove the filing for expedited processing,
qualified applications receive automatic approval 15 days after filing.
Proponents of the new approach to M&A reviews described
in the rule viewed it as more principled and methodical to better safeguard
against risks to financial stability and competition within the financial
system. Its detractors have asserted the updated review process would be
onerous and inefficient.
Consumer Bankers Association President and CEO Lindsey
Johnson released a statement calling the rule “misguided” and commended the Senate
for passing the resolution to prevent it from taking effect.
“The rule, as finalized, introduces unnecessary complexity
and uncertainty into a well-established and thoroughly vetted review process,”
Johnson said. “As such, we urge the House to swiftly approve the resolution to
overturn this rule. We stand ready to work with policymakers to modernize the
bank merger review process in a manner that promotes competition and supports
banks’ efforts to best serve consumers well into the future.”
The day after the vote, acting Comptroller of the Currency
Rodney Hood announced the introduction of a new OCC policy statement on M&A
transactions.