Warren knocks bank regulators as too permissive on mergers

WASHINGTON — Sen. Elizabeth Warren, D-Mass., criticized banking regulators for what she said is a lack of toughness in reviewing merger-and-acquisition applications.

The Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency last year approved U.S. Bancorp's acquisition of MUFG Union Bank. Warren said that regulators allowed Minneapolis-based U.S. Bancorp to "grow even larger by swallowing up a smaller rival." 

"Since 2006, the Fed has received over 3,500 bank merger applications, and they haven't stopped a single one," she said.  "Not one. Come on, guys. Who are you working for?" 

Bloomberg News

Warren's criticisms come as agencies consider putting up more guardrails on bank mergers, specifically ones involving large regional banks. Few concrete steps have been taken yet.

At the time the Fed and FDIC approved deal between U.S. Bancorp and MUFG Union Bank, the two agencies also announced they would seek public comment on a host of potential changes to how some large banks should prepare themselves for potential future failures or bankruptcies. 

Hsu outlined his concerns about large regionals in a speech last year and has since said that he has directed senior OCC staff members to work with the Department of Justice and other federal banking agencies to reconsider how they weigh bank mergers. Benjamin McDonough, the OCC's senior deputy comptroller and chief counsel, said at an OCC symposium last week that a long-standing measure to gauge bank competitiveness might be outdated. 

"OCC Acting Comptroller Hsu needs to learn to say no to anti-competitive bank mergers," Warren said in her speech. "Comptroller Hsu should also start preparing the banking industry for change by advancing new bank merger guidelines." 

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Corporations deemed anti-competitive are an increasingly popular political target of the Biden administration. President Biden addressed the issue in his State of the Union speech last week, and he is expected to continue a focus on "Buy American" policies and antitrust work throughout the rest of his administration as he lays the groundwork for his 2024 reelection campaign. 

The Consumer Financial Protection Bureau's campaign against "junk fees" is another populist policy that the Biden administration has embraced. Warren praised the CFPB, which she had a big hand in creating, and its director, Rohit Chopra, for the agency's efforts to reduce include credit card late fees and many other fees.

"Rohit Chopra at CFPB is also showing the way by cracking down on illegal junk fees and deceptive hidden fees from big banks and credit card companies, and making it easier for customers to leave bad banks with poor customer service," she said. "Three more cheers for the CFPB!"

Warren said in the speech that she will reintroduce a reform bill, the Prohibiting Anticompetitive Mergers Act, later this year. Warren introduced the legislation last March; Rep. Mondaire Jones, D-N.Y., introduced a companion bill in the House at the same time. The legislation would give the Department of Justice and the Federal Trade Commission more ability to reject mergers without a court order, and it would require the agencies to consider a merger's potential impact on workers.