On March 31, 2022, the Federal Deposit Insurance Corporation (the “FDIC”) published a Request for Information in the Federal Register (the “ROI”) soliciting comment from the public concerning the application of the laws, practices, rules, regulations, guidance, and statements of policy that apply to merger transactions involving banks, including mergers between banks and credit unions, under the Bank Merger Act (the “Bank Merger Framework”). The public comment period ends on May 21, 2022.
The FDIC has stated that the purpose of the ROI is to gauge the effectiveness of the current Bank Merger Framework in meeting the requirements of the Bank Merger Act with respect to the approval of bank mergers. Among other things, the FDIC is seeking information concerning the following factors:
- Anticompetitive/Monopolistic Factors – The FDIC is seeking to determine whether the Herfindahl-Hirschman Index (HHI) should be supplemented with other quantitative measures when considering competitive factors. The FDIC is also inquiring as to whether any such quantitative measures should be differentiated when considering mergers involving a large bank and mergers involving only small banks.
- Prudential Factors – To what extent prudential factors (e.g., capital levels, management quality, earnings, etc.) should be used in assessing the appropriateness of an application. In addition, the FDIC is seeking public comment on whether bright-line standards for prudential factors should be implemented.
- Convenience and Needs Factor – The FDIC is also seeking to determine whether reliance on a bank’s successful Community Reinvestment Act performance evaluation record is sufficient for determining whether the bank is satisfying the convenience and needs of the communities it serves. Interestingly, the FDIC is also (i) inquiring as to whether bank branch closures and consolidations should be taken into account for purpose of any review and (ii) to what extent the Consumer Financial Protection Bureau should be consulted to assist in determining whether a bank is satisfying the convenience and needs of the communities it serves.
- Presumption of Approval; Regulatory Burden – The FDIC is also seeking comments on whether the existing Bank Merger Framework creates an implicit presumption of approval, and whether the existing framework requires an appropriate burden of proof from the merger applicant.
To read the full RFI, please click here.