Last month, TD Bank and First Horizon abandoned their $13.3 billion merger after failing to receive regulatory approval for the deal. In response, Keith Noreika, a former top Trump administration bank regulator, and Bryan Hubbard, his former OCC public affairs officer,
Despite their claim that our bank merger review process is broken and overly restrictive, in recent decades bank regulators have almost entirely failed to enforce our bank antitrust laws. Instead, they have overseen the drastic consolidation of their industry. The Federal Reserve, OCC and FDIC have not denied a bank merger in twenty years, despite mounting evidence that rampant bank consolidation has led to a range of competitive, consumer and economic harms. The U.S. has lost ten thousand of the banks it once had forty years ago — a 70% drop — and today the six largest bank holding companies control more assets than all others combined.
Bank consolidation is a policy choice, not a natural outcome. Noreika knows this particularly well — as acting head of the OCC, Noreika championed the Trump administration's financial deregulation agenda, which sparked a wave of bank mergers and is now under fire for its role in enabling today's crisis. As this publication has noted,
The TD Bank merger was also particularly dangerous. TD's own track record offered regulators an abundance of reasons to block a deal that would make the bank even bigger and more powerful. In 2020, for example, the Consumer Financial Protection Bureau ordered TD to
The interagency report recommends practices for financial institutions to manage relationships with fintechs and other third parties.
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TD also has an unsettling track record of racial disparities in its lending. Among large U.S. banks, TD denied the highest proportion of mortgage applications
Now that the deal has been called off, Noreika and Hubbard attribute the merger's failure to a new "hostile environment" for mergers. It's true that the Biden administration has
Ultimately, regulators' long-running apprehension toward approving this deal is a welcome step toward addressing dangerous consolidation in our banking system. However, the truth is that bank regulators should endeavor to swiftly and decisively block mergers that will harm competition, communities and consumers. To that end, as the DOJ and FDIC review their bank merger guidelines, they must strengthen the merger review process to account for the wide array of harms caused by bank consolidation. Only then, with more robust enforcement and better bank merger policy in place, can we turn the page on an era of lax antitrust enforcement in banking and move toward a more competitive banking sector that benefits all Americans.
