Image source: David Mark / Pinterest
Nandita Bose and Michelle Price
Washington, July 9 (Reuters)-President Joe Biden’s planned executive order to promote US competition updates the Federal Reserve and the Justice Department with merger guidelines and strengthens scrutiny of transactions By encouraging, we are targeting bank mergers. Matter.
We will also request the Consumer Financial Protection Bureau (CFPB) to issue rules that give consumers complete control over their financial data so that customers can easily switch banks.
A planned order, which Biden will sign on Friday, could cool banking M & A after a surge in transactions unleashed by the Trump administration’s more industry-friendly regulatory policies.
This includes a $ 28 billion marriage between BB & T Corp and SunTrust, the largest banking partnership since the 2007-2009 financial crisis, the $ 4.7 billion acquisition of MB Financial Inc by Fifth Third Bancorp, and many small deals. Will be. According to Dealogic data, the value of commercial, savings and investment banking M & As reached $ 54.66 billion by November 2020, the highest since 2009.
According to a paper by Professor Jeremy Cress of the University of Michigan, who previously worked on monitoring bank mergers in the Federal Reserve, such transactions have been subject to federal review, but government agencies have been banks for over 15 years. We have not formally rejected the merger application.
“Bank closures are skyrocketing across the United States, dealing with the negative effects of many, and switching options is difficult … in a sense, it’s a competitive crisis,” he said.
The number of US commercial banks has declined by about 10,000, or 70%, over the last two decades, according to reports from the Federal Financial Institutions Review Board and the Federal Reserve Bank of St. Louis.
According to a National Community Reinvestment Coalition study, this will increase consumer fees, reduce access to banking services for communities of color and low-income working families, and raise concerns about risks to the financial system. I am.
Bank mergers have been targeted by progressives, including Senator Elizabeth Warren, who say the merger is harmful to consumers.
The executive order, which also corresponds to the merger guidelines of two other federal agencies that oversee banks, warns that Washington needs help to compete with financial technology starters, but it’s big. It could drag banks into the high stakes antitrust debate. The Banking Policy Institute, which represents the country’s largest lender, claimed that banks faced a concentration of competition with such players in 2020.
Reuters first reported Biden’s plans to issue a competition execution order. Since then, details have been revealed about the specific actions taken by the government that affect industries such as farm equipment manufacturers, rail and sea transportation, and the labor market.
This action is part of Biden’s move to intensify competition by not only enforcing anti-occupation laws, but also using the power of the federal government to ignite competition among various businesses.
Since taking office, he has appointed supporters of stricter antitrust enforcement in the top roles of institutions such as the White House and the Federal Trade Commission.
Former President Barack Obama’s administration issued a similar order in 2016 with no results. Biden’s order contains details on how government agencies should consider trade and competition in the industry, sources said.
Biden’s orders are also driving to allow customers to switch banks with financial transaction history data.
In October, the CFPB solicited comments on potential suggestions for increasing consumer access to its financial data collected by more and more financial institutions and apps. The agency’s new leadership hasn’t done that yet.
According to sources, the White House hopes the executive order will trigger change in government agencies.
Improving the ability to share such data can also help drive a more accurate credit scoring model and may help facilitate access to credit in poorly serviced minority communities, sources said. Added.
Reported by Nandita Bose and Michelle Price. Edited by Leslie Adler.