WASHINGTON — Rep. Andy Barr, R-Ky., plans to introduce a bill that would put timing guardrails on the Federal Reserve regarding bank merger applications, according to a copy of the bill first seen by American Banker.
In general, the bill would tighten requirements for the Fed and how it considers bank mergers, specifically aiming at preventing the central bank from slow-walking applications. Barr, who chairs the House Financial Services Subcommittee on Financial Institutions and Monetary Policy, will introduce the bill on Friday.
The bill would allow the Fed 90 days to approve a bank merger application from the time it's submitted, and the central bank would have to acknowledge the application and say whether it is complete — at least — within 30 days. Should the Fed Board not grant or deny a bank merger application within the 90 day window, approval would automatically be granted.
"In the face of an administration that seems to fear healthy competition and growth in our banking sector, this bill sends a clear message: It's time to cut through the bureaucratic delays," Barr told American Banker. "By enforcing a strict 90-day deadline for the Federal Reserve on bank merger applications, we're pushing back against the slow-walking tactics that have hindered our financial institutions. This legislation is a step towards a more dynamic, diverse and competitive banking environment, free from unnecessary regulatory paralysis."
This would be a much tougher standard for the central bank to meet compared with its current timing threshold, which simply requires the Fed, according to the Bank Holding Company Act, to approve or deny a merger within a 91-day period beginning on the day the Fed receives a "complete" application.
Banks have waited the longest they have in years for bank merger approval at the Fed, according to a semiannual report the central bank put out in September. In 2022, the average wait time was 87 days.
The legislation comes as
While previous bank-related packages from Barr have sailed through the House Financial Services Committee, none have made it through the Senate Banking Committee or beyond the lower chamber.
The Barr bill is likely to run into trouble with Senate Banking Committee Chairman Sherrod Brown and a group of senior and influential lawmakers on the panel. In the aftermath of the Silicon Valley Bank collapse, Brown, along with Sens. Elizabeth Warren, D-Mass and Jack Reed, D-R.I.,
"The application of the financial stability factor has not been rigorous enough," said the lawmakers. "In the past, Federal Reserve orders approving mergers have contained cursory analysis and reasoning to support the determination that such mergers would not result in greater financial stability risk."
Still, the bill is a strong signal as to the direction Barr and other House Republicans will take on bank merger policy should the GOP win both the House and the Senate in 2024. It's also a starting point from which Barr, who is well-positioned along with a few other lawmakers to take the top Republican spot on the House Financial Services Committee next Congress, can negotiate on bank merger policy in the future.
