WASHINGTON, D.C. – Public Citizen welcomes the introduction of the Bank Merger Review Modernization Act, authored by U.S. Sen. Elizabeth Warren (D-Mass.) to improve scrutiny of bank mergers.
“Warren’s bill will put teeth into the bank merger review process to ensure that the public interest is served,” said Bartlett Naylor, financial policy advocate for Public Citizen. “While regulators must review proposed bank mergers, the percentage they reject is virtually zero. Mergers are leaving small communities without good choices and even residents of big cities vulnerable to megabank abuses.”
Bank mergers have led to serious concentration in the financial sector, reducing the number of banks from 12,000 in 1900 to less than 5,000 today. The four largest banks already control nearly half of all deposits in the U.S.
The bill strengthens the public interest requirement for bank mergers and requires better industry concentration testing. It also puts the U.S. Consumer Financial Protection Bureau in charge of approving any merger application where consumer products are involved. Mergers can only be approved if the bank has earned the highest rating under the Community Reinvestment Act, a law that requires banks to show they are making loans fairly, especially to low-income borrowers.