The United States enjoys the world’s deepest and most liquid capital markets, a success due in part to a financial regulatory regime that has evolved over the years to address new asset classes and business models. This financial system relies on strong institutions, including a mix of global systemically important banks (GSIBs), regional banks, and smaller local banks, as well as credit unions, fintech companies, and many others. Each type of institution provides consumers and businesses that rely on the banking system with choice and promotes market competition.
Unfortunately, a recent wave of antimerger policy proposals could distort the natural evolution of bank mergers that the market desires. Inspired in part by an increasingly pervasive antimerger ideology, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Department of Justice (DOJ) are considering proposals that would create new regulatory standards for bank mergers and increase the time required to complete the merger review process. If adopted, these proposals could discourage procompetitive mergers and exacerbate a the “barbell” market distribution in which only very large and very small banks survive—a structure that could lessen financial stability and leave consumers with fewer choices for banking services
