WASHINGTON — A Department of Justice official appeared to side with Democratic members of the Federal Deposit Insurance Corp. board Friday as they
As the DOJ's antitrust division seeks additional comments on revising its own bank merger guidelines, Assistant Attorney General Jonathan Kanter applauded Consumer Financial Protection Bureau Director Rohit Chopra, a key figure in the
“The Antitrust Division shares with its federal partners an interest in ensuring bank mergers do not harm competition and the competitive process,” Kanter said in a press release. “I commend Director Chopra for his leadership in this area, and look forward to reviewing updated comments as the division undertakes this important review."
Last week, Chopra and FDIC board member Martin Gruenberg announced that they, along with acting Comptroller of the Currency Michael Hsu, had voted to issue a request for information on the FDIC's bank merger approval process. Even though she is outnumbered 3 to 1, McWilliams claimed the move was invalid because only she can add items to the board's voting agenda.
The episode has heightened tensions on the board and stoked uncertainty both about the legitimacy of the RFI and about who controls the FDIC's agenda. The three Democrats have claimed the FDIC bylaws allowed them to initiate a notational vote independent of the chair.
While the DOJ’s review of bank merger policy is separate from the process that the prudential bank regulators may embark on, the Antitrust Division’s tacit support of the FDIC board majority carries significant procedural weight. By law, the Justice Department has final say about whether a merger is approved through a review period that typically lasts 30 days after bank regulators sign off on a deal.
“The DOJ kind of holds the trump cards with antitrust review in bank mergers,” said Jeremy Kress, a professor of law at the University of Michigan and an advocate for bank merger reform. “Traditionally, the agencies have mostly played nice with one another and coordinated their reviews and use similar standards. But it doesn't have to be that way by law.”
Earlier this week, McWilliams took to the
Other analysts disagreed that the DOJ has that much influence over bank mergers relative to the prudential banking agencies.
“It is just hard for us to see the grounds the antitrust division could use to stop transactions,” said Jaret Seiberg, a policy analyst at the Cowen Washington Research Group. “That contrasts with the banking agencies, which have broader requirements such as ensuring mergers serve the convenience and needs of the community and that they don't present a systemic threat.”
But the new Justice Department request may carry political weight for struggle underway at the FDIC.
“This is a strong indication that the Biden administration stands behind Director Chopra and Director Gruenberg’s views on bank mergers,” Kress said, “and that they agree with the FDIC’s Democratic directors on the procedural issues.”
The FDIC declined to comment.
Friday’s DOJ release came just hours after Republicans on the Senate Banking Committee, led by Ranking Member Pat Toomey, R-Pa., sent a letter to the White House urging President Biden to “rebuke” the FDIC’s Democratic board majority “for their attempt to politicize the FDIC and compromise its neutrality and independence.”
The latest request for comment from the DOJ is the second since September 2020, and the focus of the Antitrust Division’s reforms has shifted under the Biden administration. The earlier request issued under the Trump administration seemed keen to identify areas where bank merger reviews could
But Friday’s request for comment indicates the division is now focused on limiting market concentration.
The DOJ will “use additional comments to ensure that the banking guidelines reflect current economic realities and empirical learning, ensure Americans have choices among financial institutions, and guard against the accumulation of market power,” according to the text of the press release.
