Senate passes legislation reversing OCC's restriction on swift bank merger approvals
In the realm of banking regulations, a significant development has unfolded as Republican lawmakers have taken action against a rule proposed by the Office of the Comptroller of the Currency (OCC) in September 2024.
Rep. Andy Barr, R-KY, has been at the forefront of this challenge, advocating for a "shot clock" to prevent banking transactions from dragging out. He argues that the OCC's rule would unintentionally limit community banks' ability to compete in the marketplace.
Sen. John Kennedy, R-LA, introduced a companion resolution, and the measure passed in the Senate on Wednesday by a 52-47 vote. This action comes weeks after the OCC and Federal Reserve approved Capital One's $35.3 billion acquisition of Discover, a deal that was approved on the condition that Discover addresses three consent orders stemming from a long-running price misclassification issue, with an attached penalty of roughly $1.5 billion.
The OCC's September 2024 rule is a rollback of a 1996 policy that deems bank deals as approved on the 15th day after the end of a comment period unless the regulator removes the filing from expedited processing. Michael Hsu, the acting chief of the OCC, proposed the rule last year with the aim of increasing transparency in the merger evaluation process.
However, the specific status of the September 2024 rule is not entirely clear. The Federal Deposit Insurance Corp. Acting Chair Travis Hill has prioritised curtailing the timeline of bank merger approvals, but details about the rule's current status are scant.
This regulatory change in the banking sector has been a subject of debate, particularly following significant bank failures in 2023 and subsequent regulatory actions by the Biden Administration that aimed to manage risk more strictly. Republican lawmakers often oppose stricter regulations, which they might view as overly burdensome or detrimental to economic growth. If the September 2024 rule was part of these stricter measures, it would likely face opposition from lawmakers who favour deregulation or less stringent regulatory oversight.
The Senate and House have each passed resolutions to overturn, through the CRA, a Consumer Financial Protection Bureau final rule that would cap overdraft fees at $5. If both the House and Senate vote to overturn the OCC's bank merger policy and President Donald Trump signs it, the OCC would be barred from issuing a "substantially" similar rule.
In addition to the September 2024 rule, the OCC has been involved in discussions about merger policy changes, aiming to reduce regulatory hurdles for fintechs and crypto companies. Fed Gov. Michelle Bowman has advocated for a shift in approach to bank regulation, suggesting that regulators should consider the trade-offs between promoting safety and soundness and not stifling economic activity.
As the regulatory landscape continues to evolve, it is essential to monitor these developments closely and understand their potential impact on the banking sector and the economy as a whole.
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- The current debate in politics revolves around a proposed rule by the Office of the Comptroller of the Currency (OCC), which, if implemented, could limit community banks' competitive ability in the business sector, particularly in finance.
- Republican lawmakers are challenging the OCC's rule, as seen by the recent passage of a companion resolution in the Senate, aiming to prevent stricter regulations that they view as overly burdensome or detrimental to economic growth, in alignment with their general-news standpoints.
