WASHINGTON — Top Senate Democrats, including several eyeing the White House in 2020, sharply pressed the Federal Reserve Tuesday over its supervision of a proposed $28 billion merger between BB&T and SunTrust.
Fed Chairman Jerome Powell — whose agency would oversee
The panel's ranking member, Sen. Sherrod Brown, D-Ohio, who is said to be mulling a White House run, questioned Powell on whether the Fed should approve the merger given the message it would send to other financial institutions.
"The Committee has stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2%."
“We’re seeing growth in some of the largest money-center banks, and SunTrust and BB&T … decided to merge, saying it’s too difficult to compete with the money-center banks’ investment in technology,” Brown said. “What message does the Fed send to regional and community banks if it approves this merger?”
Powell responded that the Fed had not actually formally received an application from the banks, but once it does, it will review the merger carefully.
“We have a process we go through for evaluating any merger, we will go through that process carefully, fairly and thoroughly,” the Fed chair said. “I will just say we haven’t prejudged anything, and we’re going to do our work carefully, fairly, thoroughly and transparently.”
BB&T announced Feb. 7 that it would merge with SunTrust, with BB&T buying $28.8 billion in SunTrust stock and retaining a 57% stake in the combined company. The deal is the industry's biggest merger since the financial crisis and has set off a
The move also engendered political blowback almost immediately. Sen. Elizabeth Warren, D-Mass., issued a
Warren — who formally kicked off her presidential campaign days after the merger was announced — raised additional concerns about the Fed’s process for considering mergers and acquisitions at Tuesday's hearing, noting that the Fed has not denied a bank merger in more than 10 years. She also criticized the fact that the public is unable to comment on mergers until after banks and regulators iron out the details of a deal.
“I’ll bet that SunTrust and BB&T looked at that 100% success rate and saw what everyone else sees, and that is that the Fed works for big, rich banks that want to get bigger … and then everyone else pays the price,” Warren said. “It’s time we put down the rubber stamp and let the public and everyone else weigh in before we create yet another 'too big to fail' bank.”
Sen. Robert Menendez, D-N.J., said that BB&T in particular ought to be subject to heightened scrutiny under the deal, given the bank’s
"I want to be sure the Federal Reserve is not … de-emphasizing its treatment of fair-lending violations when it comes time to evaluate a proposed merger,” Menendez said. “What assurance can you give us that the Federal Reserve will treat these violations with the seriousness they deserve?”
“We haven’t changed our policy on that,” Powell said. “We do consider the needs of the communities served [in a merger] and that includes consumer compliance and fair-lending records and performance under CRA.”
