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The
FDIC's board of directors, comprising Democratic and Republican
officials, is due to convene at 10 a.m. ET (1400 GMT) to discuss
the proposal, details of which have not yet been published.
A separate bank oversight agency, the U.S. Office of the
Comptroller of the Currency, in January proposed new guidance on
merger reviews it would said would make the process more
transparent.
After three of the largest-ever U.S. bank failures last year,
lawmakers from both major parties have lambasted the FDIC's
handling of subsequent mergers.
Financial reform advocates such as Democratic Senator Elizabeth
Warren have expressed outrage that regulators allowed Wall
Street giant JPMorgan Chase & CO, already the nation's largest
bank, to acquire the failed First Republic Bank last year.
In the wake of the 2023 bank failures, FDIC Board Member Rohit
Chopra, a Warren ally who heads the U.S. Consumer Financial
Protection Bureau, pledged tougher scrutiny of merger
applications.
Treasury Secretary Janet Yellen said meanwhile that officials
were likely to be open to mergers of regional banks facing
earnings pressure.
Bank executives on the other hand have complained that
regulators' foot-dragging has helped depress merger activity
among healthy banks to historic lows.
"It is hard for us to see how CFPB Director Rohit Chopra backs
any merger policy that is not critical of large bank
combinations," Jaret Seiberg, financial services policy analyst
at TD Cowen, said in a note this week.
Given likely Republican opposition to the proposal on the FDIC
board, Chopra's vote will be "critical," according to Seiberg.
Despite misgivings about New York Community Bank's exposure to
commercial real estate and earlier concerns from FDIC officials,
OCC in 2022 approved its merger with Flagstar Bank of Michigan.
FDIC then approved NYCB's takeover of the failed Signature Bank
last year. The combined entity reported a surprise loss in
January and received a $1 billion capital infusion this month as
rescue from a group of investors, including former U.S. Treasury
Secretary Steven Mnuchin.
(Reporting by Douglas Gillison and Pete Schroeder; Editing by
Aurora Ellis)
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