The US banking industry is in flux, largely thanks to federal policy that has made it easier (and faster) for institutions to merge. As concerns are raised about how industry consolidation might impact competition, Federal Reserve Chairman Jerome Powell is warning that it could hinder small businesses’ access to capital and financial services.
Earlier this month, the Federal Reserve released new data that found the average merger review time for deals in the banking sector declined to 3.8 months in the first half of 2018, from 5.6 months in the first half of 2017. The average merger review time at the Office of the Comptroller of the Currency (OCC) declined between 2016 and 2018, too, reports in The Wall Street Journal said.
That may be good news for banks, but some policymakers are concerned that industry consolidation is reducing access to financial services in rural areas. Senator Elizabeth Warren (D-MA) recently sent a letter to Powell raising this concern, noting that the Fed’s “anemic scrutiny of applications for mergers and acquisitions [M&A] raises concerns that [it] may oversee a wave of bank consolidation to the detriment of consumers and the financial system.”
Other critics have raised the issue that the OCC is advising examiners to take community group concerns into consideration separately from their M&A approval processes.
“As banks grow and they hold more market share, they should produce more of a public benefit,” said National Community Re
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