Will Gardner
Former Director, Center for Capital Market Competitiveness, U.S. Chamber of Commerce


November 16, 2021


U.S. consumers looking for banking services have access to a wide variety of options from different institutions depending upon their needs. Today, banks of all sizes offer services that were incomprehensible just 20 years ago. From mobile banking, online check deposits, to contactless payments, banking is easier than ever. The widespread adoption of these innovations is the result of a competitive banking sector with a well-regulated mergers and acquisitions environment. 

Through mergers, banks can build economies of scale, allowing them to focus on providing better products and services to customers. Mergers can also help banks provide these services to both rural and urban areas without fear that a merger will automatically lead to fewer branches or reduced access to services.Despite such robust competition, some policymakers in Washington, D.C. believe more industry oversight is needed when it comes to proposed mergers and acquisitions. 

President Biden’s July 2021 executive order on competition encourages the Attorney General and bank regulators to adopt a plan for “the revitalization of merger oversight.” And, on the heels of this order, Sen. Elizabeth Warren (D-MA) and Rep. Jesús “Chuy” Garcia (D-IL) reintroduced the Bank Merger Review Modernization Act.  

These proposals come at a time when the banking sector is already facing strict competition from new financial technologies and the increased digitization of the financial services industry. While the sheer number of banks has fallen, robust competition remains in the market driven by nearly 5,000 commercial banks and savings institutions and over 5,000 credit unions nationwide. Given this decline, regulators might also reflect on the unintended consequences brought by overregulation. For example, since the passage of Dodd-Frank, the number of full-service banks nationwide fell by 28.9 percent from 2010-2020.  

The existing process for reviewing bank mergers is already rigorous.  Once a merger application is submitted, regulators are required to follow all bank merger laws, weighing safety and soundness heavily, before any approval is granted.  

The law makes it clear that bank regulators—as well as the Justice Department’s antitrust review—are obligated to block any merger application that poses a threat to competition. For the last two decades, regulators from administrations controlled by both major political parties have followed this rigorous process and have concluded that many mergers were good for our financial system.   

In fact, the government has all the power it needs to stop mergers that are harmful to competition.  Over the last 20 years, across all sectors of the economy, the government has won all but eleven of the approximately 780 mergers it has challenged. Such a track record demonstrates the existing legal framework for merger review is sound and the government is far from powerless to intervene when needed.   

The federal government would do well to recognize that increased merger activity is driven overwhelmingly by market forces aimed at increasing competition and providing better services to consumers.  

Excessive regulation and the compliance burden it has created has certainly played a role in bank consolidation. Regulations issued with the focus of consumer benefit in mind that limit unfair competition deserve support. Sadly, the regulations spurred on by Dodd-Frank are not part of the regulatory review process overseen by the Office of Information and Regulatory Affairs within the White House.   

Placing more constraints on bank mergers will only serve to chill business activity that promotes growth, competition, and stability in our financial system.  

About the authors

Will Gardner

Will Gardner is the former director of policy at the U.S. Chamber of Commerce Center for Capital Markets Competitiveness (CCMC). He led CCMC’s portfolios on banking and insurance issues and manages its work with the Financial Stability Oversight Council (FSOC).

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