Letter to OCC on the Bank Merger Act

The American Bankers Association (ABA) appreciates the opportunity to respond to the proposal by the Office of the Comptroller of the Currency (OCC) to amend its processing rules under the Bank Merger Act (BMA) and publish a policy statement (Policy Statement) consolidating its approach to assessing applications under the BMA from national banks and Federal savings associations (collectively, "institutions"). ABA's members comprise the entire range of the US banking industry and compete vigorously in diverse product and geographic markets to serve their customers. Preserving this diversity and enhancing delivery of financial services to the national economy is a central concern of both our industry and our nation's public policy.

ABA believes that a review of the regulations and guidelines for assessing applications under the BMA (and functionally similar applications under the Bank Holding Company Act of 1956), is important to the health of the US financial system and economy. Many aspects of these regulatory provisions are now at least 25 years old. In the intervening years, the market for financial products and services has undergone tremendous change, thanks to the rise of availability and use of online banking, the interstate expansion of bank branch networks, enhanced market access made possible by advertising and communication innovations, and the increased market presence of nonbank financial firms, including "fintechs." Because of these significant changes in the financial services market, the current regulatory approach of OCC, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the United States Department of Justice (DOJ) fail to account for significant competition in many product lines, including in many rural markets.

Accordingly, ABA supports OCC’s goal of joining with the other banking agencies and DOJ in updating the assessment guidelines under the BMA. In principle, ABA strongly supports OCC’s objective to go beyond retail deposits as a proxy for market power. Nevertheless, much important remaining work lies ahead, and banks must be able to plan strategically under clear, transparent standards for the healthy growth and innovation of their institutions and the future delivery of service to their customers and communities. For that reason, we write to highlight several aspects of the Proposal. In particular, for the reasons discussed below, ABA urges OCC to withdraw the proposed amendments to Section 5.33 of its rules, "Business combinations involving a national bank or Federal savings association."

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