Warren questions Fed resolve on mergers after BB&T-SunTrust deal
WASHINGTON — After the proposed merger of BB&T and SunTrust Banks announced this week, Sen. Elizabeth Warren, D-Mass., said she is concerned about the Federal Reserve’s scrutiny of merger and acquisition applications.
“The board's record of summarily approving mergers raises doubts about whether it will serve as a meaningful check on this consolidation that creates a new too big to fail bank and has the potential to hurt consumers,” Warren said in a letter to Fed Chair Jerome Powell on Thursday, the same day the deal was announced.
Warren’s concerns about the merger come less than a year after she questioned the Fed and the Justice Department about how they have reviewed past bank mergers and how they intend to preserve competition and financial stability. She warned in April 2018 that a regulatory relief bill, which she and many other progressive Democrats opposed and which was signed into law in May, would lead to a “wave” of bank mergers.
Warren said the information the Fed provided in response to her request last year revealed that the Fed “approved virtually all merger and acquisition requests, risking significant negative impacts on consumer choice and competition.”
“Industry analysts predicted that S. 2155 would result in an increase in merger and acquisition activity among banks,” Warren said. “I was particularly concerned that increased M&A activity could harm local and community banks and the consumer that rely on them.”
She added that predictions 2019 could be the “year of the bank merger” appear to be correct.
Warren is asking Powell to provide data on the number of merger applications submitted to the Fed since the passage of the reg relief law in May, and whether that number is expected to increase in 2019. She asked for data on the number of merger applications that were withdrawn as a result of applicants’ less-than-satisfactory Community Reinvestment Act or consumer and fair lending compliance.
Warren is also asking for details about the concerns raised by Fed staff that led to application withdrawals, the number of merger applications that received adverse public comments, and whether Fed staff have informal conversations with applicants to discuss potential mergers and acquisitions.
Warren is asking Powell to respond to her inquiry by Feb. 21.
House Financial Services Chairwoman Maxine Waters, D-Calif., raised similar concerns about the BB&T-SunTrust deal in the wake of the new reg relief law.