(Bloomberg) -- US regulators in charge of evaluating bank mergers are “asleep at the wheel,” especially given the looming task of considering Capital One Financial Corp.’s proposed purchase of Discover Financial Services, according to Senator Elizabeth Warren.
The Federal Reserve and the Office of the Comptroller of the Currency should fall in line with the Federal Deposit Insurance Corp., which has already finalized updates to its merger guidelines, and the Justice Department, which said it intends to follow a 2023 policy, the Massachusetts Democrat said in a letter to regulators.
“The Fed and the OCC’s failures to act to meaningfully strengthen our nation’s bank merger review framework threaten the stability of our economy and the livelihoods of working families,” Warren said in the letter. “Using a set of weak, decades-old rules to evaluate the massive Capital One-Discover deal, which was announced in February and would combine two of the nation’s largest credit card companies, would amount to regulatory malfeasance.”
The FDIC voted in September to more closely scrutinize the biggest bank deals – those leading to firms with more than $100 billion in assets. The Justice Department said at the time that it was ditching its 1995-era approach in favor of the updated perspective.
The OCC published guidance on the same day, which Warren said “falls woefully short” of a 2021 White House order to revamp how financial-services deals are assessed. “These updates primarily enhance the transparency of the OCC’s review — rather than update it to meet the complexity of modern banks,” she said.
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