WASHINGTON (Reuters) - U.S. Democratic Senator Elizabeth Warren on Friday pressed regulators on how they plan to preserve competition in the banking sector if Congress passes a bill that is expected to lead to consolidation among mid-sized lenders.
In a letter sent to Federal Reserve Chairman Jerome Powell and Attorney General Jeff Sessions, Warren raised fears a bill easing rules introduced after the 2008 global financial will free up large regional banks to merge, potentially reducing competition.
“Large regional banks compete with community banks for customers hoping to open checking accounts and small businesses looking for a loan to expand,” the Massachusetts lawmaker wrote.
“I’m concerned about the negative impact of increased consolidation ... on community banks and on customers who benefit from more competition for their business.”
The Fed and the DOJ share responsibility for reviewing the competitive effects of bank mergers and acquisitions. Spokespeople for both agencies declined to comment.
On March 14, 2018, the Senate passed a bill which would reduce federal oversight of banks with between $50 billion and $250 billion in assets, making it much more attractive for many banks to merge or acquire new assets.
Reuters reported in February that deal bankers and bank executives expected to see deal-making in the mid-size bank sector pick-up as a result of the new legislation.
Citing the Reuters and other reports, Warren asked Powell and Sessions for a range of information on how they have historically reviewed bank mergers and asked if this approach has proved sufficient.
Republicans and 13 Senate Democrats who originally backed the bill say it will help promote economic growth by reducing the regulatory burden for community lenders.
However, Warren, along with other Democrats and some former bank regulators, has vigorously opposed the bill, saying it will increase systemic risk by weakening capital standards for big banks and undermines consumer and civil rights protections.
Analysts expect the bill, which has yet to be passed by the House of Representatives, to become law in coming months.
Reporting by Michelle Price; Editing by Susan Thomas