DPC Applauds Call to Improve Bank Merger Review Process
The Domestic Policy Caucus applauds members of the House Financial Services Committee who are urging the Federal Reserve to continue improving the efficiency of its bank merger review process.
In a recent letter, the committee members recognize an important principle: Regulators can maintain rigorous oversight while ensuring that unnecessary delays do not prevent financial institutions from investing, innovating, and expanding opportunities for consumers and small businesses.
The letter correctly notes that banking mergers already undergo extensive scrutiny before formal applications are submitted. Regulators evaluate competition, financial strength, managerial resources, consumer protection, and Community Reinvestment Act performance through a transparent regulatory framework. By the time most applications reach the Federal Reserve, they have already survived significant due diligence, making timely regulatory decisions both practical and appropriate.
As the letter observes, delays impose real costs by creating uncertainty for employees, customers, and investors while slowing investments and integration efforts. The source of some delays includes the receipt of adverse comments on an application for merger, which only in recent years has unfortunately become a partisan exercise. Banking innovation used to draw bipartisan and enthusiastic support from both Democrats and Republicans; today, Democrats often oppose mergers within the financial services industry on dubious grounds.
The proposed combination of Enova International and Grasshopper Bank provides a case in point and illustrates why every transaction deserves an objective review based on its merits rather than ideological opposition to consolidation. The merger would combine an experienced online lender with a digital-first bank to create a nationwide institution focused on serving consumers and small businesses that have often been overlooked by traditional financial institutions. By operating as an FDIC-insured bank with a national charter, the combined company would replace a patchwork of state lending requirements with a more consistent federal regulatory framework while benefiting from the stability of insured deposits. Those efficiencies have the potential to expand responsible lending, improve access to modern banking products, and strengthen financial inclusion.
This is precisely the type of innovation regulators should evaluate through evidence, not preconceived partisan assumptions. Yet this proposed merger has drawn criticism from some Democrats, notably attorneys general from several states.
The Domestic Policy Caucus supports a regulatory framework that protects consumers while encouraging responsible innovation, competition, and expanded access to financial services.
Efficient, predictable merger reviews, free of partisanship, are an essential part of achieving those goals.