[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                         MERGER POLICIES OF THE
                        FEDERAL BANKING AGENCIES

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON FINANCIAL INSTITUTIONS
                          AND MONETARY POLICY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 1, 2024

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 118-89
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
56-461 PDF                  WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------     

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

               PATRICK McHENRY, North Carolina, Chairman

FRANK D. LUCAS, Oklahoma             MAXINE WATERS, California, Ranking 
PETE SESSIONS, Texas                     Member
BILL POSEY, Florida                  NYDIA M. VELAZQUEZ, New York
BLAINE LUETKEMEYER, Missouri         BRAD SHERMAN, California
BILL HUIZENGA, Michigan              GREGORY W. MEEKS, New York
ANN WAGNER, Missouri                 DAVID SCOTT, Georgia
ANDY BARR, Kentucky                  STEPHEN F. LYNCH, Massachusetts
ROGER WILLIAMS, Texas                AL GREEN, Texas
FRENCH HILL, Arkansas, Vice          EMANUEL CLEAVER, Missouri
    Chairman                         JIM A. HIMES, Connecticut
TOM EMMER, Minnesota                 BILL FOSTER, Illinois
BARRY LOUDERMILK, Georgia            JOYCE BEATTY, Ohio
ALEXANDER X. MOONEY, West Virginia   JUAN VARGAS, California
WARREN DAVIDSON, Ohio                JOSH GOTTHEIMER, New Jersey
JOHN ROSE, Tennessee                 VICENTE GONZALEZ, Texas
BRYAN STEIL, Wisconsin               SEAN CASTEN, Illinois
WILLIAM TIMMONS, South Carolina      AYANNA PRESSLEY, Massachusetts
RALPH NORMAN, South Carolina         STEVEN HORSFORD, Nevada
DAN MEUSER, Pennsylvania             RASHIDA TLAIB, Michigan
SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York
ANDREW GARBARINO, New York           SYLVIA GARCIA, Texas
YOUNG KIM, California                NIKEMA WILLIAMS, Georgia
BYRON DONALDS, Florida               WILEY NICKEL, North Carolina
MIKE FLOOD, Nebraska                 BRITTANY PETTERSEN, Colorado
MIKE LAWLER, New York
ZACH NUNN, Iowa
MONICA DE LA CRUZ, Texas
ERIN HOUCHIN, Indiana
ANDY OGLES, Tennessee

                     Matt Hoffmann, Staff Director
       Subcommittee on Financial Institutions and Monetary Policy

                     ANDY BARR, Kentucky, Chairman

BILL POSEY, Florida                  BILL FOSTER, Illinois, Ranking 
BLAINE LUETKEMEYER, Missouri             Member
ROGER WILLIAMS, Texas                NYDIA M. VELAZQUEZ, New York
BARRY LOUDERMILK, Georgia, Vice      BRAD SHERMAN, California
    Chairman                         GREGORY W. MEEKS, New York
JOHN ROSE, Tennessee                 DAVID SCOTT, Georgia
WILLIAM TIMMONS, South Carolina      AL GREEN, Texas
RALPH NORMAN, South Carolina         JOYCE BEATTY, Ohio
SCOTT FITZGERALD, Wisconsin          JUAN VARGAS, California
YOUNG KIM, California                SEAN CASTEN, Illinois
BYRON DONALDS, Florida               AYANNA PRESSLEY, Massachusetts
MONICA DE LA CRUZ, Texas
ANDY OGLES, Tennessee
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    May 1, 2024..................................................     1
Appendix:
    May 1, 2024..................................................    39

                               WITNESSES
                         Wednesday, May 1, 2024

Anderson, James L., Deputy General Counsel, Federal Deposit 
  Insurance Corporation (FDIC)...................................     4
Dowd, Ted, Acting Senior Deputy Comptroller and Chief Counsel, 
  Office of the Comptroller of the Currency (OCC)................     5

                                APPENDIX

Prepared statements:
    Anderson, James L............................................    40
    Dowd, Ted....................................................    54

              Additional Material Submitted for the Record

Barr, Hon. Andy:
    Written statement of the Bank Policy Institute...............    60
    Comment letter from PNC to the OCC, dated April 11, 2024.....    62
Anderson, James L.:
    Written responses to questions for the record from Chairman 
      Barr.......................................................    82
Dowd, Ted:
    Written responses to questions for the record from Chairman 
      Barr.......................................................    88

 
                         MERGER POLICIES OF THE
                        FEDERAL BANKING AGENCIES

                              ----------                              


                         Wednesday, May 1, 2024

             U.S. House of Representatives,
             Subcommittee on Financial Institutions
                               and Monetary Policy,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:03 a.m., in 
room 2128, Rayburn House Office Building, Hon. Andy Barr 
[chairman of the subcommittee] presiding.
    Members present: Representatives Barr, Posey, Luetkemeyer, 
Williams of Texas, Loudermilk, Rose, Timmons, Norman, 
Fitzgerald, Kim, De La Cruz, Ogles; Foster, Sherman, Meeks, 
Scott, Green, Beatty, Vargas, Casten, and Pressley.
    Ex officio present: Representative Waters.
    Chairman Barr. The Subcommittee on Financial Institutions 
and Monetary Policy will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time.
    Today's hearing is entitled, ``Merger Policies of the 
Federal Banking Agencies.''
    I now recognize myself for 5 minutes to give an opening 
statement.
    Mergers of financial institutions can promote competition 
and generate cost savings that can then be passed on to 
consumers in the form of lower interest rates on loans, reduced 
fees, and higher interest paid on deposits. Clear expectations 
and timeliness surrounding merger reviews are critical so banks 
can make informed decisions about whether to pursue a merger 
when approval is likely or withdraw an application when it is 
not. Bank mergers, especially those involving mid-sized 
regional banks, help preserve a robust banking system and 
promote competition. They also allow community banks to 
overcome onerous regulations and meet technology needs. It is 
far better for distressed banks to sell themselves than to fail 
and rely on FDIC receivership, which would result in 
significant costs to the Deposit Insurance Fund. Those claiming 
that regulators, ``rubber stamp merger applications,'' either 
lack understanding of the merger processes and economics or 
purposely misguide the public about the facts.
    We have heard from Federal banking regulatory officials 
that they value breadth in our banking system, which is the 
envy of the world and includes small community banks and 
regionals which serve consumers and businesses in our 
communities and large banks that compete in the global arena. 
Recent actions by the FDIC and the OCC to update their merger 
review processes, however, do not conform with regulators' 
claims that they value our broad and diverse system. As 
numerous prominent witnesses in the subcommittee have noted, 
the recent, fatally-flawed Basel III Endgame proposal sets up 
economics that drive banks toward merger and acquisition 
activity.
    The Basel proposal, the Dodd-Frank Act, and an onslaught of 
other recent flawed proposals impose unnecessary and 
unjustified costs onto regional and small banks. Banks are 
forced to try to spread those costs over added business lines 
and activities, and the regulatory onslaught sets clear 
incentives and the necessity for mergers and acquisitions.
    At the same time, the FDIC and the OCC want to make mergers 
more difficult, injecting sluggishness into their processes, 
even for mergers that clearly meet the approval criteria under 
the Bank Merger Act. With varying proposed conditions for 
merger approval, the FDIC, the OCC, and the Federal Reserve 
would be operating with different approval processes and 
standards, injecting additional uncertainty incentives for 
regulator shopping, and negative consequences for the dynamism 
of our banking system. At a time when there are already many 
questions about sequencing with the Department of Justice 
(DOJ), the differing approaches to antitrust screenings put 
forward recently by the FDIC and the OCC create more divergence 
and increase the likelihood of confusion for institutions.
    Today, we will try to get insights into why the opaque and 
too often partisan policy positions of the FDIC and the OCC 
have driven them to put forward their suggested new merger 
guidelines. It should be noted that the FDIC proposal came out 
in March of this year, which is odd, given that FDIC Chairman 
Gruenberg and CFPB Director Chopra, in December of 2021, seemed 
to have felt that working on mergers was so important and 
urgent that they had to violate longstanding FDIC procedures 
and engineer a thinly-veiled coup against the then-Chairman of 
the FDIC.
    Chairman Gruenberg and Director Chopra hit pause on their 
urgency for more than 2 years before working to produce a 
partisan FDIC merger proposal, reinforcing that they acted in 
2021 to usurp the powers of Chairman Greenberg's predecessor. 
The recent FDIC and OCC proposals are clear steps in the wrong 
direction.
    With that, I will note that there are three bills attached 
to this hearing related to the merger processes. The first is 
my bill, the Bank Failure Prevention Act, to improve the 
timeliness and clarity of the merger application process. The 
other two, the Business Loan Privacy Act, and the Small Lenders 
Exempt from New Data and Excessive Reporting (LENDER) Act, work 
to provide clarity over CFPB rules, which are part of the 
onslaught of confusing and misguided regulatory efforts that 
force mergers as banks need to spread their ever-growing 
regulatory burden over additional business activities.
    The Chair now recognizes the ranking member of the 
subcommittee, the gentleman from Illinois, Dr. Foster, for 4 
minutes for an opening statement.
    Mr. Foster. Thank you, Chairman Barr, and thank you to our 
witnesses for joining us today.
    Since the 1980s, there has been a steady consolidation 
within the U.S. banking system. In 1984, there were more than 
14,000 commercial banks operating within the United States, and 
today, that number is down to around 4,000. Some of this 
concentration may be attributed to changes in the regulatory 
and legal landscape. Some of it is due to the natural economies 
of scale as banking becomes more and more digitalized. Some is 
due to the simple fact that young people continue to move out 
of rural areas and into the larger cities that are the natural 
habitats of the larger banks.
    But beyond structural changes, mergers and acquisitions 
have been pursued by financial institutions seeking access to 
new markets, economies of scale, and technologies that often 
benefit the institution and its customers. In Congress, through 
the Bank Merger Act and related legislation, we have rightly 
recognized that not all mergers are created equal and that some 
acquisitions can pose either threats or benefits to 
competition, to financial stability, and to Americans' access 
to financial services, particularly in historically-underserved 
communities. And for that reason, Federal banking regulators 
are tasked with the responsibility of reviewing bank mergers to 
prevent the resulting institutions from undermining financial 
stability and the financial needs of Americans.
    Maintaining a healthy-sized distribution in the banking 
industry is of bipartisan concern. When I was a business owner, 
I saw firsthand the value of having a diverse banking system 
with a wide distribution of bank sizes. Having multiple banks 
in a community competing for your business strengthens the 
negotiating power in those small businesses and households and 
forces banks to compete for their business, often leading to 
better terms, interest rates, or service. Americans are better 
off when we have options, and we should strive for a 
competitive marketplace for banks of all sizes from community 
banks to global systemically important banks (G-SIBs).
    In 2021, President Biden issued an Executive Order 
encouraging regulators to take steps to promote market 
competition across our economy, specifically directing the 
Department of Justice and Federal banking regulators to review 
and strengthen their bank merger policies. And today, we will 
discuss the state of the American banking industry and proposed 
updates to the merger review policies of the OCC and the FDIC.
    The proposals naturally and rightly increase scrutiny of 
complex mergers among the largest banks, focusing on key risk 
indicators like rapid growth, which partly contributed to the 
failure of Silicon Valley Bank last year. The proposals face an 
emphasis on integration planning to ensure that the resulting 
institutions and their management will operate in a safe and 
sound manner. The proposals will also ensure that the affected 
communities have an opportunity for their voices to be heard. 
Both the FDIC and the OCC are currently accepting comments on 
these proposals, and I encourage the regulators to actively 
engage with the comments they receive, at least those that are 
not AI-generated bot nonsense.
    Americans benefit from a strong and diverse banking system 
with competition at all levels, so I look forward to hearing 
the perspectives of our witnesses who played a key role in 
developing these proposals. Thank you. I yield back.
    Chairman Barr. Today, we welcome the testimony of James L. 
Anderson, Deputy General Counsel at the Federal Deposit 
Insurance Corporation, and Mr. Ted Dowd, acting Senior Deputy 
Comptroller and Chief Counsel at the Office of the Comptroller 
of the Currency. We thank each of you for taking the time to be 
here.
    Each of you will be recognized for 5 minutes to give an 
oral presentation of your testimony. And without objection, 
each of your written statements will be made a part of the 
record.
    Mr. Anderson, you are now recognized for 5 minutes to give 
your oral remarks.

STATEMENT OF JAMES L. ANDERSON, DEPUTY GENERAL COUNSEL, FEDERAL 
              DEPOSIT INSURANCE CORPORATION (FDIC)

    Mr. Anderson. Thank you, Chairman Barr. Chairman Barr, 
Ranking Member Foster, and members of the subcommittee, thank 
you for the opportunity to appear today to discuss the FDIC's 
role in bank merger transactions. My written statement today 
will summarize the statutory framework under which the FDIC 
evaluates bank merger transactions, the current merger 
application submission and review process, and finally, 
recently-proposed updates to the FDIC's Statement of Policy 
(SOP) and proposed SOP on bank merger transactions.
    The FDIC is one of three Federal banking regulators with 
responsibility for evaluating transactions subject to the Bank 
Merger Act. Section 18(c) of the FDI Act, which codifies the 
Bank Merger Act, prohibits an insured depository institution 
from engaging in a merger transaction without regulatory 
approval. The FDIC has jurisdiction to act on transactions that 
involve insured depository institutions (IDIs) in which the 
acquiring, assuming, or resulting institution is an FDIC-
supervised institution. The FDIC also has jurisdiction to act 
on any merger application that involves an IDI and any non-
insured entity, notwithstanding the IDI's charter.
    In assessing merger applications, the FDIC evaluates each 
application against the same statutory factors under the Bank 
Merger Act, regardless of the size of the parties to that 
transaction. Those factors include monopolistic and 
anticompetitive effects, the financial and managerial resources 
and future prospects of the existing and proposed institutions, 
the convenience and needs of the community to be served, the 
effectiveness of any IDI involved in that proposed merger 
transaction in combating money laundering activities, and the 
risk to the stability of the U.S. banking and financial system.
    The FDIC implemented its responsibilities under the Bank 
Merger Act by codifying regulations, issuing a statement of 
policy on bank mergers, and publishing an Applications 
Procedures Manual. Although there has been a significant amount 
of consolidation in the banking sector over the last 30 years, 
due in part to mergers and acquisitions, there has not been a 
significant review of the implementation of the Bank Merger Act 
by the banking agencies in that time.
    Accordingly, the FDIC Board of Directors approved a Federal 
Register Notice on March 21st of this year, seeking public 
comment on proposed revisions to the agency's Statement of 
Policy (SOP), which is our proposed SOP on bank merger 
transactions. The proposed SOP reflects significant regulatory, 
legislative, and industry changes, including the Dodd-Frank 
adoption of the financial stability test. The proposed SOP 
would update, strengthen, and clarify the FDIC's approach to 
evaluating transactions that are subject to the Bank Merger 
Act. Additionally, concurrent with the proposed SOP, the FDIC 
is seeking comments on proposed revisions to its supplemental 
section of the Interagency Bank Merger Act Application.
    In conclusion, extensive consolidation has occurred in the 
banking industry over the last 30 years, some of which is 
certainly due to bank mergers. In that light, the effectiveness 
of the regulatory framework in meeting the requirements of the 
Bank Merger Act is critical to the future safety and soundness, 
financial stability, community accountability, and 
competitiveness of the banking system. As such, conducting a 
review of that framework and seeking public comment on the 
review process is certainly warranted.
    The FDIC will continue to collaborate with other Federal 
banking regulatory agencies as it considers the appropriate 
framework for reviewing bank merger transactions. The FDIC 
remains committed to engaging with the public, industry 
stakeholders, and, indeed, Members of Congress in support of 
this mission. Thank you, and I look forward to your questions.
    [The prepared statement of Deputy General Counsel Anderson 
can be found on page 40 of the appendix.]
    Chairman Barr. Thank you. Mr. Dowd, you are now recognized 
for 5 minutes.

  STATEMENT OF TED DOWD, ACTING SENIOR DEPUTY COMPTROLLER AND 
 CHIEF COUNSEL, OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)

    Mr. Dowd. Thank you. Chairman Barr, Ranking Member Foster, 
and members of the subcommittee, I am pleased to testify today 
to discuss the Office of the Comptroller of the Currency's 
review and consideration of bank merger applications. I 
currently serve as the OCC's Acting Senior Deputy Comptroller 
and Chief Counsel, and oversee the agency's legal and licensing 
activities, including applications for bank mergers and other 
business combinations.
    The process by which the OCC considers bank mergers 
involving national banks and Federal savings associations is 
governed by Federal law and regulation and the OCC's licensing 
manual on business combinations. The OCC carefully reviews each 
bank merger application received and must provide approval 
before a bank may consummate a merger.
    The OCC supports a diverse and competitive banking system 
and appreciates the value that community, mid-sized, and large 
banks provide to the communities and businesses they serve. Our 
bank merger application review process allows for robust and 
thorough consideration of statutory and regulatory factors as 
well as public input into the process.
    Under the Bank Merger Act, the OCC is required to consider 
five factors when conducting reviews of bank mergers. These 
include: one, the effect on competition; two, financial and 
managerial resources and future prospects of the banks 
involved; three, probable effects on the convenience and needs 
of the community served; four, banks' effectiveness in 
combating money laundering activities; and five, the risk to 
the stability of the U.S. banking and financial system.
    Separately, under the Community Reinvestment Act (CRA), the 
OCC is required to assess an applicant's record of meeting the 
credit needs of its entire community, including low- and 
moderate-income neighborhoods, consistent with safe and sound 
operations.
    The OCC also considers several regulatory factors, 
including the capital level of a resulting bank; conformity of 
the transaction to applicable law, regulation, and supervisory 
policies; purpose of the transaction; impact on the safety and 
soundness of the applicant bank; and the effect on the 
applicant bank's shareholders, depositors, creditors, and 
customers.
    Public input is important to the OCC's review of bank 
merger applications. To facilitate transparency, the OCC posts 
the public portion of applications on its website and initiates 
a formal comment period for at least 30 days. The OCC carefully 
considers all comments received from the public, including 
comments from public meetings or hearings.
    The OCC recognizes the importance of ensuring that the bank 
merger process reflects the economic realities of today, and 
results in healthy and sound mergers. In February of 2023, the 
OCC hosted a public all-day symposium on the bank merger 
process to explore the effects of mergers on competition, 
financial stability, and community convenience and needs. 
Information from the symposium informed the OCC's more-recent 
efforts to update its analytical framework for bank mergers. 
Toward this end, the OCC is committed to working with the 
Federal Reserve, the FDIC, and the Department of Justice to 
ensure appropriate coordination and collaboration in each 
agency's consideration of bank merger applications.
    In addition, earlier this year, the OCC issued a proposal 
to update its rules and policies for bank mergers to enhance 
transparency around the decision-making process under the Bank 
Merger Act. It includes a policy statement that describes 
features of applications that are generally consistent with OCC 
approval, and those that raise supervisory or regulatory 
concerns. The proposed policy statement seeks to provide more 
information and clarity around our decision-making. For 
example, it notes that applications where the acquiring bank 
has satisfactory supervisory ratings, no open enforcement 
actions, and no fair lending CRA, Bank Secrecy Act, or consumer 
compliance concerns, along with other features, are consistent 
with timely approval. We recently extended the comment period 
on the proposal until June 15th, and encourage all stakeholders 
to provide comments.
    In conclusion, ensuring continued diversity and competition 
in the Federal banking system is of critical importance to the 
OCC. As the OCC continues to work with other regulators and the 
DOJ on updating its analytical framework related to bank 
mergers, we are also taking steps to improve the processes by 
which we consider bank merger applications and the transparency 
around our decision-making. We welcome further engagement on 
these matters. Thank you, and I look forward to answering your 
questions.
    [The prepared statement of Acting Senior Deputy Comptroller 
Dowd can be found on page 54 of the appendix.]
    Chairman Barr. Thank you to our witnesses for their 
testimony. I see that the ranking member of the full Financial 
Services Committee, Ms. Waters, has arrived. Would the ranking 
member like a minute for an opening statement?
    Ms. Waters. Thank you very much. I appreciate that, Mr. 
Chairman. Thank you. As bank mergers continue to be rubber 
stamped by regulators, people across America pay the price 
through higher junk fees and predatory actions. For example, 
after Wells Fargo's mergers, it became too big to manage and 
repeatedly broke the law, harming millions of consumers. If 
mergers like these continue, we will be left with only a 
handful of megabanks that will be empowered to fleece everyone. 
Following the news of Capital One's proposed merger with 
Discover, I urged the government to block it, and led a letter 
with 15 Committee Democrats to the bank regulators to 
immediately strengthen their merger reviews. I am pleased that 
the OCC and the FDIC issued vote proposals to do that, although 
the Fed has not.
    And I just have to mention two things quickly. One is that 
there is a lawsuit against Wells Fargo because African 
Americans were denied refis, 50 percent of what they tried to 
get. And then, there is another one where Wells Fargo used 
Latino employees to literally fleece Latinos in the way that a 
product was being produced.
    Chairman Barr. The gentlelady's time has expired.
    Ms. Waters. We just have to know about these. Thank you 
very much, and I yield back.
    Chairman Barr. Thank you. The gentlelady's time has 
expired. We will now turn to Member questions. The Chair now 
recognizes himself for 5 minutes for questions.
    Mr. Dowd, I really enjoyed a recent conversation I had with 
Acting Comptroller Hsu, and I appreciate his thoughtfulness on 
this topic. As I communicated to him, my view is that it far 
too often takes 12 months or more to approve a merger 
transaction and, in some instances, even longer than 12 months. 
Ironically, my Democrat colleagues contend that this long, 
drawn-out process is a mere rubber stamp, but isn't that just 
too long, Mr. Dowd? Can you describe some of the negative 
consequences for shareholders and employees when applications 
are pending for a long length of time?
    Mr. Dowd. Thank you, Chairman Barr. I appreciate the 
question, and it is a very important question in terms of how 
the Federal banking agencies consider bank merger applications 
that are in front of the agency and in our coordination with 
our peer regulators at the Federal Reserve, the FDIC, and the 
Department of Justice. I will say that in general, the 
complexity of the application is highly correlated to the 
timing of a decision on the application. When you think about 
the bank merger applications and business combination 
applications that come before the OCC, the vast majority of 
those are processed in what I would characterize as a very 
timely and quick fashion----
    Chairman Barr. Just reclaiming my time, Mr. Dowd. For those 
that are not processed in a timely manner, the concern is that 
customers, shareholders, and employees of the target bank are 
left on the hook indefinitely, to see share prices drop and 
employees depart. We have seen this recently with target banks. 
To avoid this, can you or the OCC support legislation that 
ensures applications are processed in a timely manner and 
deemed complete in a set timeframe? I am from Kentucky and we 
like basketball. It is kind of like a shot clock--we would like 
to see a shot clock. The answer can be no, but the regulatory 
purgatory, the indecision, is what we are concerned about here.
    Mr. Dowd. Understood, and I think the analogy is one that I 
relate to and I would think many at the OCC relate to. I do 
have a Knicks fan behind me, so we will dispense with that. I 
was born in Springfield, Massachusetts, the home of the 
Basketball Hall of Fame.
    Chairman Barr. Very good.
    Mr. Dowd. I am very familiar with the concept of a shot 
clock. More importantly, I am familiar with the legislation 
that you and your staff have been working on with the OCC and 
our staff. I believe that we have had some very productive 
discussions on that front, and we look forward to continuing 
those discussions with your staff. And I think there are many, 
many important and valid ideas for consideration of that 
proposal.
    Chairman Barr. Thank you. I look forward to continuing to 
work with the OCC on that, and I value that collaboration. Mr. 
Dowd, let me talk about these community benefits agreements. In 
current law, or under the OCC's proposed rulemaking, does a 
bank need to enter into a community benefits agreement in order 
for you to conclude that the merger application would meet the 
convenience and needs of the community?
    Mr. Dowd. The short answer is, no. I will say that the 
engagement between banks involved in a merger application and 
community benefit groups can be very helpful in terms of 
thinking forward on the convenience and needs factor, which is 
obviously 1 of the 5 statutory factors that has to be 
considered and has to be reconciled before there is a decision 
with respect to approval on a bank merger. So in general, they 
can be helpful.
    Chairman Barr. Yes.
    Mr. Dowd. But they are not necessary.
    Chairman Barr. And this is actually where the rubber meets 
the road. Even if it is not required as a matter of law or 
policy, it is still required as a practical matter in cases 
where a community group has filed an adverse comment on a 
merger application. And my concern here is that the agencies 
are outsourcing the convenience and needs prong of the 
statutory review factors by requiring a community benefits plan 
to get merger approval, even if it is just de facto. And that 
effectively confers upon the community groups a great degree of 
leverage to extract favorable deals, sort of a blackmail or 
extortion situation, if I may state it frankly. Maybe, the OCC 
doesn't see it that way, and certainly, community groups don't 
see it that way, but I can tell you that banks that face 
thwarted deals see it that way. Is the OCC sensitive to that?
    Mr. Dowd. We are sensitive to it. We consider it one part 
of the process, and I will conclude by saying we do have a 
notice of proposed rulemaking (NPR), and we welcome comments on 
that issue and all other related issues.
    Chairman Barr. My time has expired. I have more questions, 
but we will need to move on. I appreciate the feedback. The 
gentleman from Illinois, Dr. Foster, is now recognized for 5 
minutes.
    Mr. Foster. Thank you, Chairman Barr, and, again, to our 
witnesses.
    First, a quick question on sort of the process of how this 
works. As you are reconciling the various and sometimes 
competing factors involved in a merger decision or regulatory 
approval for a merger, how is it done? Is there some sort of 
point system where if you get enough points, it will get 
approved? Is there a committee vote? How formal is this?
    Mr. Dowd. Thank you for the question. It is a very good 
question. It is a comprehensive and holistic process. We start 
with the five factors that are articulated in the Bank Merger 
Act that are required considerations for the OCC and the other 
Federal banking agencies, so effect on competition, financial 
and managerial resources, and future prospects, convenience and 
needs, BSA, AML compliance, risk to the financial system and 
financial stability.
    And beyond that, we have regulatory factors in Part 5 of 
the OCC's regulations that is a regulation implemented 
consistent with the Bank Merger Act. And on that front, we 
consider the capital level of the resulting bank, conformity of 
the transaction or the ability to conform with applicable law, 
regulations, supervisory policies, purpose of the transaction--
--
    Mr. Foster. Yes. My question was, okay, you have all these 
factors. Some may be positive. Some may be negative. How do you 
add them all up to a decision? What is the logic of the final 
decision given all of these factors, some of which may be 
positive or negative?
    Mr. Dowd. It is facts and circumstances. Of the factors 
that I mentioned, there are some applications that come in the 
door, and they are very clean on many of those factors. There 
are some factors where we will have additional questions and we 
will focus effort on those additional factors, but in general, 
it is facts and circumstances.
    Mr. Foster. Okay. And I understand the inputs. What is the 
mechanism for the final decision? Is there one person who just 
decides? Is there a committee, and everyone leans back in their 
chairs and votes? What is the mechanism once you have evaluated 
all of these competing, potentially conflicting requirements?
    Mr. Anderson, can you help me out here?
    Mr. Anderson. I can try. At the FDIC, there is not a 
mathematical formula, which is part of the question you were 
asking. It is a very iterative process. We do take the very 
same statutory factors that the OCC looks at, and, frankly, we 
go through and try to match up the information that is provided 
to see if, ultimately, those factors can be resolved. And to 
the extent that each of those factors is resolved positively, 
if you will, then the FDIC will approve the application. If we 
are not able to resolve each of those factors positively, then 
we will make a recommendation either to deny the application or 
to allow it to go to the Board because the FDIC----
    Mr. Foster. Okay. I think I understand. It is essentially 
subjective, which may be the right answer here. Now, yesterday, 
I discussed the topic of mergers and acquisitions with a group 
of Illinois community bankers and some from my district. And 
specifically, in anticipation of this hearing, I asked them 
about the amount of time that it has taken them to get an 
answer regarding the outcome of merger applications at their 
smaller banks as they have filed with your agencies. The group 
have no complaints about the timeline, and they said that they 
would typically receive a response well within 90 or perhaps 
120 days.
    I recognize that there is concern for members of this 
committee that it takes too long to resolve a merger 
application. At least for the community bankers that I spoke 
with from Illinois, this doesn't seem to be a concern. However, 
I would expect that the review process would naturally take 
longer as the size and complexity of the merging institutions 
increases. So to the extent that we might consider a shot 
clock, a legislative time limit on regulatory approvals, it 
seems like the time should be appropriately scaled to the size 
and complexity of the contemplated merger.
    So, Mr. Dowd, in your experience, does it take longer for 
the OCC to confidently review a merger between banks with 
hundreds of billions of dollars in assets than a merger of 
smaller banks?
    Mr. Dowd. I would say just a natural function of a 
potential merger between two large institutions adds complexity 
to the transaction and the review that needs to be conducted by 
the regulators to ensure that the resulting bank at the end of 
the process is a bank that can operate in a safe and sound 
manner, and has the appropriate systems and controls in place 
to comply with applicable law and to operate in a safe and 
sound manner. Again, I will note that the NPR that the OCC 
recently issued does list a number of features that would be 
consistent with timely approval, including satisfactory 
supervisory ratings, no open enforcement actions, and fair 
lending.
    Mr. Foster. Okay. I am afraid I am running out of time 
here, but thank you for your response.
    Chairman Barr. The gentleman's time has expired. The 
gentleman from Florida, Mr. Posey, is now recognized.
    Mr. Posey. Thank you very much, Chairman Barr. Have either 
one of you ever worked in a bank?
    Mr. Anderson. I have not.
    Mr. Dowd. When I was in college, I was a bank teller. 
Beyond that, I have never worked in a bank.
    Mr. Poesy. How would you know, each of you, what kind of 
impact local banks have on their communities? I think it is 
something you consider in making decisions. How do you have 
that insight? How do you gain that insight?
    Mr. Anderson. Sir, to your point, I have not worked at a 
bank, but we certainly have people at the FDIC who have; we do 
have people at the FDIC with that type of expertise. And I 
would say that they are the staff who review an application, 
review those statutory factors and weigh the application, if 
you will, against those statutory factors to take a look at 
those concerns.
    Mr. Dowd. I would agree, and endorse everything that Mr. 
Anderson said. I would also elaborate on that a little bit to 
say that at the OCC, our core mission is bank examination, 
which means that we have examiners on the ground at banks at 
the largest institutions.
    Mr. Posey. Okay. Next question. Do your rules say anything 
about putting loans on a nonaccrual basis if the loan is 
greater than the appraisal of the collateral?
    Mr. Dowd. The current OCC notice of proposed rulemaking 
that is out for comment to----
    Mr. Posey. No. I am not talking about the proposed rule. I 
want to know if your rules prohibit putting a loan on 
nonaccrual simply because the collateral is lower than the 
loan?
    Mr. Dowd. I would have to look at the rule. Off the top of 
my head, I do not know the answer to that question.
    Mr. Anderson. Unfortunately, neither do I. I would have to 
look at the rule as well.
    Mr. Posey. Okay. So, you wouldn't know if the regulators 
have ever violated that rule?
    Mr. Anderson. Again, I would have to look at the rule.
    Mr. Dowd. Sitting here now, I don't have the information I 
would need to answer that question, but I would be happy to 
have our staff engage with you and your staff, and I think that 
is a question that we could answer very quickly following this 
hearing. We just need to look at the rule.
    Mr. Posey. Mr. Chairman, we ought to have OCC regulators in 
here sometime to find out how it really works since the guys at 
the agency don't know.
    Mr. Dowd, how does the OCC account for increased 
competition from non-bank financial institutions, like 
fintechs, in assessing the competitiveness of bank mergers?
    Mr. Dowd. Thank you. It is a very good question. Going back 
to the statutory factors in the Bank Merger Act, we have to 
consider the effect on competition, we have to consider the 
convenience of needs of the community served. So in that 
process, I think it is natural to look at not just what the 
landscape of the banking community is in a particular 
community, but also how financial services are delivered in 
general, both within that community and on a basis of scale 
throughout the United States.
    One of the things that our NPR addresses is the idea that 
we have these principles from 1985 with the Department of 
Justice about how bank mergers can be considered, and I think 
there is at least a recognition within the OCC that the 
landscape and the manner in which financial services in 
general, and banking services in particular, have been 
delivered since 1995 has evolved considerably. We do need to 
think about that, and that is part of what we are doing with 
our notice of proposed rulemaking.
    Mr. Posey. Mr. Anderson, does your research suggest that 
larger banks have a greater or lesser capacity than smaller 
banks to diversify holdings to help reduce risk, and how is 
that addressing your analysis?
    Mr. Anderson. I'm sorry. Can you repeat the question?
    Mr. Posey. Yes. Does your research suggest that larger 
banks have a greater or lesser capacity than smaller banks to 
diversify holdings to help reduce risk, obviously, and how is 
that discussed in your merger analysis?
    Mr. Anderson. I am not certain that is discussed in our 
merger analysis. I would say that is something that we would 
have to look into.
    Mr. Posey. Thank you, Mr. Chairman. My time has expired.
    Chairman Barr. The gentleman's time has expired. The 
ranking member of the Full Committee, the gentlewoman from 
California, Ms. Waters, is now recognized.
    Ms. Waters. Thank you very much. Mr. Dowd, I appreciate 
that the OCC recently extended its public comment period for 
the proposed merger of Capital One and Discover. I and many 
others are strongly opposed to that merger, and it is important 
that the OCC, along with the Fed, conducts robust due diligence 
and gives affected workers, consumers, small business owners, 
and communities the opportunity to share their views on the 
merger. I also appreciate that in the OCC's proposal to improve 
its merger reviews, you are considering ways to convene more 
public hearings on large, consequential bank mergers. The 
proposed merger of Capital One and Discover would seem to meet 
this test if it were approved. It would form the 6th largest 
commercial bank, and would also be the largest credit card 
lender in the United States. Accordingly, will the OCC commit 
to holding multiple public hearings on this proposed merger so 
that members of the community can have their voices heard?
    Some may be wondering why I put so much time and attention 
on examining these mergers, and thinking, oh my goodness, 
mergers are good for the economy. You should be doing 
everything that you can to make sure that it occurs in a timely 
manner, as you are being told by some on the opposite side of 
the aisle.
    Wells Fargo has taught us a lesson. Wells Fargo is the 4th 
largest bank, and we know that they are too-big-to-fail, and 
they became big because of these mergers in which they have 
been involved. And now, they are being sued for race 
discrimination and mortgage lending practices, and Wells Fargo 
workers have alleged that anti-Latino bias in predatory 
mortgage schemes is what is going on at Wells Fargo. So, you 
can thank Wells Fargo and all of its mergers for the size that 
it is and the way that it has conducted itself. That is why we 
have to know more about these mergers. OCC, are you thinking 
about more public hearings?
    Mr. Dowd. Thank you, Ranking Member Waters. That is an 
excellent and a timely question. I am not in a position to talk 
about any particular merger that is pending before the OCC, but 
I will say that the policy statement that is attached in the 
OCC's NPR on bank mergers is helpful and instructive on this 
point. And paraphrasing, there is a presumption in that policy 
statement that there is a lien for public hearings for 
institutions or applications that involve the merger of 
institutions that exceed over $50 billion in total consolidated 
assets.
    So, with that as background in terms of what the OCC has 
most recently said with respect to the value of public meetings 
on these large merger transactions, I will also add that it is 
the belief at the OCC that the public comment process, both 
written and in public meetings, is critical and vital to 
understanding all of the multiple facets to these transactions.
    Ms. Waters. Thank you. Thank you so very much. I just want 
to remind everybody that this merger will create the 6th 
largest commercial bank, and Capital One will be the largest 
credit card lender in the country. This is not small stuff, 
this is big stuff, and we must pay attention and we must 
understand what we are doing to support mergers without knowing 
exactly where they are going, what they are going to do, and 
how the public would be harmed in some ways. So, I thank you 
very much for your attention to public hearings.
    Years ago, the communities would absolutely be contacted, 
and we would form partnerships with all of the locals who were 
interested, all of the stakeholders. We would go to these 
public hearings, and we would have a say, and that was even 
before I was an elected official. I am looking for more of 
this. And I yield back the balance of my time.
    Chairman Barr. The gentlelady yields back. The gentleman 
from Missouri, Mr. Luetkemeyer, is now recognized.
    Mr. Luetkemeyer. Thank you, Mr. Chairman. I don't really 
know where to start on all this because it is very frustrating 
to me to see the regulators in front of us this morning who 
handle the ability of banks to be able to merge, to be able to 
protect themselves, to be able to do business in the 
communities they do business in, and we have seen in the last 2 
years the lack of regulatory oversight, the inability to do 
your job, your ability to close a merger on these banks--
Silicon Valley, Signature and those other banks--in a very, 
very, very short time, weeks, days, and here we are talking 
about mergers that sometimes take years. What is the 
difference?
    Mr. Anderson, what is the difference?
    Mr. Anderson. I am not certain I am understanding your 
question, sir.
    Mr. Luetkemeyer. Well, in an emergency situation, you can 
figure out how to streamline, cut red tape, and make things 
work, but in a situation where you are sitting there strangling 
these other banks to keep them from merging, which they on 
their own have decided to do, and we will get into the reasons 
here in a minute, but you are strangling them from being able 
to do that. It takes weeks and weeks, sometimes years to get 
that done. Why?
    Mr. Anderson. Certainly, Congressman, that is not our goal. 
Our goal is to process----
    Mr. Luetkemeyer. I didn't say it was your goal. I am asking 
why it is happening.
    Mr. Anderson. I would say that we certainly have to look at 
each application based upon the facts and circumstances of 
those applications. I would certainly say the vast majority of 
merger applications that we get do not take years and years to 
resolve. There are some----
    Mr. Luetkemeyer. No, Mr. Anderson, it takes months to do 
that. I have been in the middle of mergers, two or three of 
them myself. It takes months to get this done. There is no 
reason for that. I think our chairman has it right; we need a 
shot clock on you guys to make sure that you do this job and do 
it correctly and keep the uncertainty from happening to the two 
banks involved. This is nonsense.
    Mr. Anderson. Congressman, I understand your question, and 
as I indicated earlier, our proposed SOP is out for comment. 
Those are the exact type of comments that we would appreciate 
receiving, and we will take them under consideration.
    Mr. Luetkemeyer. One of the problems we have is that the 
amount of regulations flowing is just inordinate. It is 
unbelievable. I saw an article this morning, and I had to read 
it 3 times to make sure I read it correctly, but the article 
said that since January 1st, this Administration, the Biden 
Administration, has promulgated now and codified a trillion 
dollars' worth of new rules and regulations. That is right, 
with a ``T,'' a trillion dollars' worth of regulations. We have 
had testimony in some of the committees I have been on that 
over the last 3 years, it is $150 billion per year. The first 4 
months of this year just blows that all out of the water. And a 
lot of this, not a lot of this trillion-dollar stuff, but a lot 
of the other rules and regulations involve banks and the cost 
of doing business for them.
    Yesterday, I had a bunch of independent community bankers 
in my office, and we were talking about the rules and 
regulations. I said, well, do you realize that there are 
thresholds on some of these rules that you don't have to abide 
by? You know what their comment back was to me? They said, you 
know what? That threshold is irrelevant, because what is going 
to happen is the regulators are going to come in, they will 
kind of wink and nudge and say, you know what? It would be a 
good idea if you kind of comply with these things because you 
know what is going to happen. It is all going to roll downhill.
    You guys have a problem from the standpoint of perception 
of your rules and regulations and the way you administer those, 
and the cost that is involved is prohibitive for the banks to 
continue to do this. I see the small banks in my area. They are 
one by one failing and being merged with other ones because 
they can't keep up with what is going on. And then, when they 
try and merge and try and salvage this stuff, it is very 
difficult for them to do that. I have one bank in my district 
that failed over 2 years. That is untenable. It cannot happen.
    So I guess my question to you is, do you ever go back after 
you have merged these banks and take a look at the communities 
and the effect that the merger had on the communities?
    Mr. Anderson. We certainly examine these institutions, and 
to the extent of this----
    Mr. Luetkemeyer. I didn't ask whether you examined the 
institutions. I know the examiners show up and look at the new 
merged bank, and you have two communities, for instance, and a 
bank merged over here into this bank over here. Do you ever go 
back and look at this other community and see how it has been 
affected?
    Mr. Anderson. As I said, we examine these institutions. We 
examine them for CRA and the like, so I think we do.
    Mr. Luetkemeyer. Do you make sure that the surviving bank 
actually is fulfilling its commitment to do whatever you did in 
the merger agreement?
    Mr. Anderson. I think one of our goals would be to ensure 
that ultimately this----
    Mr. Luetkemeyer. I didn't ask you whether it is a goal, Mr. 
Anderson. I asked if you do it.
    Mr. Anderson. We do it through our examination process, 
yes.
    Mr. Luetkemeyer. You do it through your examination 
process. It is very concerning to me because I think if you 
don't understand the effect--and Mr. Posey asked the question 
of whether you guys have ever worked in a bank yourself--of 
what is going to happen with your decisions, it is very 
frustrating to me to see here that you are making those kind of 
decisions and really don't have any way of following up on them 
and seeing if you actually did the right thing. Mr. Chairman, I 
yield back.
    Chairman Barr. The gentleman yields back. The gentleman 
from California, Mr. Sherman, is now recognized.
    Mr. Sherman. Back in the summer of 2021, very early in the 
Biden Administration, he signed an Executive Order saying that 
the four agencies dealing with bank mergers--the DOJ, the Fed, 
the FDIC, and the OCC, two of which are represented here--
should provide updated guidelines and regulations for approving 
bank mergers. And yet here we are, and the two agencies before 
us here have at least issued proposed regulations. The other 
two, your two partners, aren't even here to explain why they 
haven't done anything at all, at least as far as publishing 
proposed regulations.
    The ranking member led 15 House Democrats in urging all 
four of you to move forward quickly. What is the state of 
progress with regard to issuing new merger guideline policies, 
and when do you think your agency is going to turn its proposed 
regulations into final regulations? Go ahead?
    Mr. Anderson. Congressman, our proposed SOP is not a 
regulation. It is purely a statement of policy, and so it is 
proposed----
    Mr. Sherman. But is it a proposed statement?
    Mr. Anderson. It is a proposed statement of----
    Mr. Sherman. Proposed. So, when do you go all the way to a 
statement of policy?
    Mr. Anderson. Our hope is that we will get comments over 
the next 60 days and that we will eventually finalize that 
statement of policy as we move forward. We don't have a 
specific date in mind.
    Mr. Sherman. And do you need to wait for your three sister 
agencies to act before you have a different approach?
    Mr. Anderson. With respect to our statement of policy, we 
do not.
    Mr. Sherman. Okay, and I will ask our other witness. When 
are you going to have a final statement of policy or 
regulation?
    Mr. Dowd. Let me start by saying that we are aware of the 
Executive Order. We take the Executive Order very seriously.
    Mr. Sherman. Yes, I know. Please get to my question.
    Mr. Dowd. Pardon me. I think the question----
    Mr. Sherman. When are you going to have it done?
    Mr. Dowd. Obviously, there is a process, so we have 
issued----
    Mr. Sherman. When are you going to get it done?
    Mr. Dowd. The comment period runs until the middle of June, 
if I am remembering correctly, approximately mid-June. We will 
go through the Administrative Procedure Act (APA) process of 
evaluating comments.
    Mr. Sherman. Okay. When are you going to get it done? Just 
a date, the time, a month, a year?
    Mr. Dowd. It is a function of the administrative process.
    Mr. Sherman. Okay. I am going to go on to another question. 
I am reclaiming my time. I am going to go on to another 
question.
    Usually, we deal with bank mergers. This is, in a way, a 
credit card processing merger. Visa has $2.4 trillion in 
transactions; MasterCard, $1.1; and American Express, a little 
under $900 billion. Discover is much smaller, $182 billion, and 
not a real competitor to the triopoly. We have learned in New 
York in dealing with scandal sheets and newspaper tabloids, 
this whole idea of, ``catch and kill.'' Has Capital One 
committed in a legally binding way that they are not trying to 
capture and kill Discover, that they will not just move the 
Discover people over to Visa or MasterCard and eliminate this 
potential competitor? Do either of you have an answer?
    Mr. Dowd. I am happy to start.
    Mr. Sherman. I think it is a yes-or-no question. Have they 
made the commitment or not?
    Mr. Dowd. I am not in a position to comment on any pending 
application for the OCC, but in general, we will look at all of 
the statutory and regulatory factors, including the factors 
that are on point with the issue that you are posing.
    Mr. Sherman. Okay. I will ask the other witness.
    Mr. Anderson. Congressman, the application that you are 
talking about is not before the FDIC, so I actually can't 
comment on that.
    Mr. Sherman. Okay. You folks are bank prudential 
regulators, so it is in your DNA to see whether the banks are 
successful and healthy and profitable. To what extent can you 
balance that with your other objective to make sure that 
merchants and consumers are getting a fair deal? Can you do 
that in the scope of being an agency where 99 percent of the 
people you work with are focused on bank prudential security? 
Mr. Dowd?
    Mr. Dowd. I think the answer is, yes, I think we can 
balance those interests. We do so in each Bank Merger Act 
application by going through those statutory factors.
    Mr. Sherman. I would urge all the bank regulators who look 
at this to make sure that we don't lose. This is an opportunity 
to turn Discover into a real competitor in this space or, at 
the other extreme, see it eliminated as even a potential look 
competitor. I yield back.
    Chairman Barr. The gentleman yields back. The gentleman 
from Texas, Mr. Williams, is recognized.
    Mr. Williams of Texas. Thank you, Mr. Chairman. And thank 
you to the witnesses for being here today.
    When people hear the word, ``merger,'' they automatically 
think something bad, but mergers can be good for the banking 
industry. Mergers are a sign that banks are providing for the 
financial needs of the customers and communities they serve. 
Mergers can help banks become more effective competitors, 
generate cost savings, and promote healthy competition in a 
robust banking system.
    However, on the other side, mergers are sometimes conducted 
out of necessity, such as when banks can't afford the expensive 
compliance costs that come along with burdensome regulations, 
which forces banks to consider mergers in order to spread these 
regulatory costs over a wider book of business. So, this threat 
of overwhelming compliance costs due to regulatory cliff effect 
ends up hurting the regional and community banks, which are put 
under pressure to merge when they are subject to enhanced 
capital liquidity requirements from the Federal banking 
agencies and financial regulators.
    So, Mr. Anderson, can you expand on what the FDIC is doing 
to address the anticompetitive effects of burdensome 
regulations for small community banks and what the FDIC can do 
to mitigate the potential negative effects as proposed changes 
to its merger review framework may have?
    Mr. Anderson. As you mentioned, we have an obligation under 
the Bank Merger Act to look at the competitive effects of any 
merger. We look at that from the geographical and product 
markets. We take a look at the other competing entities in 
those marketplaces as well. We take a look at the deposit 
concentrations as a proxy for bank services, but we also look 
at other services. So, I think we ultimately look at those 
competitive factors and try to address the concern you just 
raised.
    Mr. Williams of Texas. Yes. Regulations are killing 
community banks, in case you don't know that. I continue to 
hear from banks in my district that regulators are slow to 
review merger applications and that the review process lacks a 
clear set of expectations, and we have talked about that today. 
Bankers do not want to have to devote time, money, and 
resources to pursue a merger when the approval process is just 
going to be dragged out and delayed by regulators. The role of 
the Federal regulators should be to improve the merger process, 
not make it more burdensome for the institutions applying.
    So, Mr. Anderson, again, what is the average time the FDIC 
has to review a merger application?
    Mr. Anderson. I can't speak to every year. I can say that 
last year, the average time was approximately 109 days once the 
application was received. I think potentially a better measure 
is that in terms of when an application is deemed substantially 
complete, typically, around 68 days has been the turnaround 
time. Our goal is to hit 60, to do that in 60 days on a typical 
case, and we meet that goal approximately 60 percent of the 
time. We did that last year, as well as the year before.
    Mr. Williams of Texas. Okay. Now, in July of 2021, 
President Biden issued an Executive Order that would create a 
whole-of-government approach to competition policy. This is 
counterproductive, and just as we have seen with the regulatory 
regime of the Biden Administration, more government involvement 
in the free market does not work.
    And under this Executive Order, banking regulators were 
tasked with updating their guidelines on banking mergers to 
provide more-robust scrutiny of the merger process. The FDIC 
and the OCC have both published their updated guidelines, both 
of which do nothing to benefit bank mergers. The OCC's proposal 
does more harm than good by removing key provisions that would 
streamline and expedite the application review process, further 
clogging the already-increasing backlog of applications. Now, 
while the FDIC's proposal would discourage mergers altogether, 
it further disadvantages banks and the customers they serve. So 
putting aside the damage these proposals will do on their own, 
it is shocking how different they are from each other.
    Depending on the structure of a proposed merger, an 
applicant could have to get approval from multiple banking 
agencies, and if these proposals are adopted, banks may have to 
try and comply with conflicting merger review regimes, which 
would lead to significant uncertainty.
    Mr. Dowd, has the OCC considered the damage, confusion, and 
regulatory burden that could be placed on banks by having to 
follow conflicting guidelines from multiple different 
regulators?
    Mr. Dowd. I'm sorry. I didn't understand the question.
    Mr. Williams of Texas. Okay. Mr. Dowd, has the OCC 
considered the damage, confusion, and regulatory burden that 
could be placed on banks by having to follow conflicting 
guidelines for multiple different regulators?
    Mr. Dowd. The OCC considers all aspects and potential 
implications, both positive and negative. When we propose to 
implement new rules, guidelines, and policies, we consider it 
on balance. So, thinking about a merger application that is 
front of the OCC, in the abstract, we don't think about it as 
positive or negative. It is the attributes of that application 
that are important to the OCC.
    Mr. Williams of Texas. Okay. I yield back, Mr. Chairman.
    Chairman Barr. The gentleman from Georgia, Mr. Scott, is 
now recognized.
    Mr. Scott. This is a very important and a very timely 
hearing. Mr. Anderson, under the proposed rules, lenders with 
more than $50 billion in assets would now face FDIC hearings 
examining whether a merger was in the public interest. Is that 
right?
    Mr. Anderson. That is the proposal, that we would have 
public hearings for mergers that would have----
    Mr. Scott. While those with combined assets of $100 billion 
would have to clear more stringent hurdles to ensure that they 
do not pose a risk to our financial system. Is that right?
    Mr. Anderson. That is the way the proposal is written at 
this point, yes.
    Mr. Scott. Today, 47 banks in the United States, out of 
more than 4,500 banks, have over $50 billion in assets, and 32 
are above $100 billion in assets, so my question to you, Mr. 
Anderson, is this. What is the evidence or indication that the 
current financial environment or pressures on earnings of some 
of the U.S. regional banks could lead to prolonged 
concentrations in our banking sector?
    Mr. Anderson. That is a very complicated question. I think 
that is a question that the economists would probably be in a 
better position to answer.
    Mr. Scott. Let me ask you this. Can you express with full 
confidence that all banks above $50 billion in assets have 
access to sufficient liquidity to guard against unexpected 
deposit overflows from uninsured depositors?
    Mr. Anderson. I am not in a position to commit to that. 
Again, there are probably people at the FDIC who are better-
positioned to answer that question, sir.
    Mr. Scott. Also, Mr. Anderson, in your testimony, you 
referenced the FDIC's merger review that would be broad in 
nature and that the FDIC would consider the record of each 
institution in complying with consumer protection requirements 
and maintaining a sound and effective compliance system.
    Mr. Anderson. That is correct.
    Mr. Scott. As you are aware, however, when banks publicly 
express that they are exploring a merger, time matters, and 
uncertainties about progress and outcomes weigh on our 
customers, local communities, employees, and shareholders. So 
my question to you is, how can the FDIC assure our banks and 
the public that regulators will make decisions that are in the 
best interest of everyone promptly and fairly?
    Mr. Anderson. I think that is what our proposed SOP is 
actually getting at; it is trying to lay out exactly how the 
FDIC reviews the statutory factors. It also is laying out the 
type of information that we would need from those institutions 
to be able to move quickly. So, I think that is really the goal 
of the proposed SOP, and I think if we were able to move 
forward in that space, we would be able to make those decisions 
in the manner that you just mentioned.
    Mr. Scott. Let me ask you this, Mr. Anderson. Just how will 
the FDIC demonstrate that a bank merger subject to its approval 
will result in an institution that is positioned to better meet 
the convenience and needs of the community it serves?
    Mr. Anderson. Well, as you mentioned, the statutory factor 
requires that we consider the convenience and needs of the 
community to be served. The proposed SOP talks about hoping or 
wanting to have a resulting institution that is going to better 
serve the community. We would look at their CRA rating at the 
end. We would look at the products and services that they would 
be offering that could be achieved through higher lending 
limits or other new products and the like. And those are things 
that we would consider as we move forward.
    Mr. Scott. Thank you, Mr. Anderson.
    Mr. Anderson. Thank you.
    Chairman Barr. The gentleman from Georgia, Mr. Loudermilk, 
is now recognized.
    Mr. Loudermilk. Thank you, Mr. Chairman, and thank you to 
our witnesses for coming to testify today on behalf of your 
respective agencies.
    Like many of my colleagues, I am concerned that the banking 
regulators have taken aggressive steps to discourage mid-sized 
and community banks from partnering with fintechs to keep up 
with technology and meet customer and regulatory expectations. 
At the same time, the FDIC and the OCC have proposed revisions 
to the bank merger review process that we are here to talk 
about today, which I suspect will hamper banks' ability to 
leverage economies of scale and the technological expertise of 
other banks to fill the gap created by the hostile regulatory 
treatment of bank/fintech partnerships.
    Mr. Anderson, could you briefly discuss some of the 
challenges community banks face when trying to keep up with 
technology and meet the regulatory and cybersecurity practices 
expected of them?
    Mr. Anderson. We are certainly aware that those things are 
costly to community banks, and we take those things into 
account, if you will, when we are looking at a bank merger 
transaction. So, we are aware of them. Obviously, to the extent 
that community banks want to partner with third parties, that 
is certainly appropriate, provided they are doing so in a 
manner that ultimately allows the institution to operate in a 
safe and sound manner. So, we certainly are aware of those 
concerns.
    Mr. Loudermilk. Okay. Well, that is good to know. When you 
compare the regulatory burdens that are put on a small 
institution versus a large institution, it is clear to see that 
when a larger financial institution has as much as one or two 
floors of just regulatory specialists or compliance specialists 
versus a small, two branch community bank which may fall under 
a similar set of regulations, it is much more difficult on 
those banks. With that in mind, do you think mergers might 
allow banks to gain the economies of scale to make capital-
intensive technological investments?
    Mr. Anderson. They can. That is possible.
    Mr. Loudermilk. Does the FDIC view bank/fintech 
partnerships as beneficial to mid-sized and community banks?
    Mr. Anderson. They can be.
    Mr. Loudermilk. Do you believe the FDIC is, or at least 
strives to be, a politically-independent regulatory agency?
    Mr. Anderson. I do.
    Mr. Loudermilk. Okay. Mr. Dowd, do you feel the same way 
about the OCC, that it is politically independent?
    Mr. Dowd. I do.
    Mr. Loudermilk. Okay. Well, that concerns me a little bit. 
As contrast, Mr. Dowd, there is something that you said to one 
of my colleagues earlier regarding the Executive Order by the 
President which encouraged Federal banking agencies to re-
examine their policies on merger reviews under the Bank Merger 
Act and Bank Holding Company Act. As far as I am aware, prior 
to this Executive Order, the agencies hadn't given any 
indication that they were contemplating changes to the merger 
review process, is what I may derive from your previous answer. 
Was Executive Order 14036 a contributor to the OCC's decision 
to reassess its merger review process?
    Mr. Dowd. I would say that the OCC is always looking at the 
business of banking and, in particular, the evolution of the 
business of banking. So when you get to the organic statute 
that the national banks and the OCC operate under 12 U.S.C. 
24(7), national banks may engage in the business of banking, 
and obviously, the business of banking today looks very 
different than it looked 10 years ago, 50 years ago, et cetera.
    Mr. Loudermilk. But more specifically, from what I 
understood from an answer you gave earlier, the Executive Order 
was kind of a catalyst or you were giving attention to the 
Executive Order. What I am asking is, is that Executive Order 
one of the primary reasons that you are reassessing this?
    Mr. Dowd. I would say the Executive Order and the landscape 
of the delivery of financial services and the landscape of the 
banking industry are all things that contribute to an OCC 
decision to think about bank mergers and how we approach bank 
mergers. Fundamentally, if you look at the way that the 
agencies have approached it, there hasn't been meaningful 
change since 1995.
    Mr. Loudermilk. I think you are kind of skirting the 
question here. Let me ask Mr. Anderson the same thing. Was 
Executive Order 14036 a contributor to the FDIC's decision to 
reassess its merger review process?
    Mr. Anderson. Congressman, we were certainly aware of the 
Executive Order. I think from the FDIC's perspective, our 
statement of policy on bank mergers had not been updated for a 
number of years. As Mr. Dowd suggested, the banking landscape 
has changed dramatically, and we, frankly, thought it was 
appropriate to take a look at our bank merger policy.
    Mr. Loudermilk. It is very suspicious that both of your 
agencies decided to take this on after that was made public. I 
see I am out of time, so, Mr. Chairman, I yield back.
    Chairman Barr. The gentleman yields back. The gentleman 
from California, Mr. Vargas, is recognized.
    Mr. Vargas. Thank you very much, Mr. Chairman. I appreciate 
it and, of course, the witnesses for being here. It seems like 
a lot of the questions that you are getting from the dais up 
here really should go to the economists and not the prudential 
regulators. But since that is what we are doing, I am going to 
ask a few of those myself.
    When the chairman brought up the metaphor of the shot 
clock, the amount of time that you would have in basketball on 
the shot clock, Mr. Dowd, you seemed to have a moment of joy 
today, the first one, maybe the only one, because you seem to 
know about the Wildcats and you seem to know quite a bit about 
the Knicks or someone behind you. But he actually mixed his 
metaphors, because he spoke about basketball, but he also spoke 
about purgatory. I am not familiar with purgatory in 
basketball, but I am familiar with purgatory in Catholicism.
    Purgatory is not a bad place. Everyone thinks that 
purgatory is a bad place. If you are a Catholic, you know that 
purgatory is not a bad place because it assures that you are 
going to get to heaven. Purgatory is actually a very good 
place. You go to purgatory to expiate for your moral failings 
or for your sins. However, if you have a graver mortal sin that 
you cannot atone for in purgatory, you actually go to hell. 
That is why purgatory is good, because it means you only have 
venial sins. So when he said that there is this time clock, and 
I don't know how far I want to push this analogy because I just 
thought about it today, but it just seems that if you do have a 
merger or an acquisition and you put them in purgatory, that is 
not necessarily bad, because they still have the opportunity to 
merge, they still have the opportunity to accomplish what they 
want to do.
    With that being said, I do want to know how you take in the 
needs of the community here, especially through public 
comments, because again, purgatory can be very quick or it can 
be very long. It depends on the number of sins. So again, would 
you please comment on that?
    Mr. Dowd. Sure. Let me start by saying that I am always 
happy to talk about basketball, but I can see this is not the 
forum to talk about basketball, so I will leave shot clock 
analogies to the side. Your question about community 
involvement, I think, is an excellent question, and it is a 
question and it is a process that is critical to the evaluation 
of a merger application that is before the OCC and how the OCC 
approaches that merger application. Built within the process, 
under the statutory factor of convenience of needs, the OCC is 
legally required to consider the convenience and needs of the 
community with respect to the impact or a potential impact of a 
merger transaction.
    Diving into that, what does that mean? That means we are 
very interested in the views of the stakeholders, the potential 
consumers of the resulting bank. So, when we have a potential 
merger application, as I mentioned in my testimony, we put that 
up on our website. We solicit public comment----
    Mr. Vargas. If I could interrupt you just for one second, 
because I think this is the point that I was trying to make, 
the difference between an economist and a regulator, because 
you take a look at the individualized decision in front of you, 
just the bank. You don't take a look, necessarily, at the other 
banks or the community in the area, I don't think. There is 
some unfairness to look at the community itself and say, okay, 
we are not going to allow this bank to merge because of issues 
going on in that particular community. I know you take them 
into account, but that is not necessarily the largest question 
here that you have to settle.
    And the reason I say that is because economists will take a 
look and say that there are too few banks now because these 
mergers and acquisitions have consolidated them in such a way 
that there isn't the market competition that you need. But you 
guys are looking at the banks individually, you are not looking 
at them as a system, and it would be unfair to look at them as 
a system when there is a particular application before you.
    In fact, you can't even talk about the particular 
application in front of you because you say that is unfair 
because it is before us. Well, that is the case. I think that 
is the problem that we are looking at, how do you solve the 
larger problem, and that is something I think to which an 
economist would have a better answer. That is why I think it is 
a little difficult for you guys here. My time is up. I know you 
want to answer. I apologize. Maybe you could answer that in 
writing?
    Mr. Chairman, I yield back.
    Chairman Barr. The gentleman yields back, and the gentleman 
from Tennessee is recognized, Mr. Rose, who may be able to 
explain what he witnessed in terms of regulatory purgatory in 
Tennessee.
    Mr. Rose. Thank you, Chairman Barr, and Ranking Member 
Foster, for holding this hearing, and thank you to our 
witnesses for being with us today. I don't know anything about 
purgatory, but I do know that my Lord and Savior, Jesus Christ, 
died on the cross to answer for my sins, and if you believe in 
Him and have faith in Him and repent, you can enjoy that as 
well. So thank you again, gentlemen, for being here.
    I would like to start by discussing some of the challenges 
that community banking organizations face. Mr. Anderson, what 
has the Federal Deposit Insurance Corporation found in their 
analysis of community banking organizations and, specifically, 
their ability to keep up with technology to meet the growing 
regulatory expectations to maintain cybersecurity and compete 
for customers?
    Mr. Anderson. I think it is fair to say that it is a very 
competitive market. We recognize that there are certain 
challenges that the community banks face given their size and 
their ability or inability at times to grow to scale, so those 
are certainly things that we are aware of and we try to factor 
in as we supervise those institutions.
    Mr. Rose. And I wonder, do you think that mergers are an 
important pathway to allow these banks to gain the economies of 
scale, frankly, that are necessary to meet these capital-
intensive technology investments that are required by the 
changing landscape and by the changing regulatory landscape?
    Mr. Anderson. In certain circumstances, they can be.
    Mr. Rose. Okay. I would like to shift now and discuss the 
situation that community banks actually face, which is a 
dragged-out merger review and approval process. Delays in 
merger approvals come with many risks, in my view, not the 
least of which are cybersecurity vulnerabilities. While a 
merger is pending, technology investments naturally wane, and 
companies may see the departure of key employees who manage 
cybersecurity risk. If a bank must wait several months for 
approval, it becomes vulnerable to cyberattacks, frankly, 
putting its depositors at risk.
    Mr. Dowd, when the Office of the Comptroller of the 
Currency decided to remove streamlined applications and 
expedited merger reviews in its proposed rulemaking, was there 
any consideration given to the fact that depositors were 
potentially being exposed to cyber criminals?
    Mr. Dowd. Let me start by saying that national security is 
extremely important to the OCC, and a bank's ability to comply 
with BSA and AML requirements and laws is paramount to our 
supervision of the Federal banking system. To the extent that 
we have an application in front of us that raises questions or 
presents issues with respect to a bank's ability to comply with 
BSA and AML requirements, that is something that we take 
extraordinarily seriously.
    Mr. Rose. Mr. Dowd, I can't help but observe--and it is my 
view of this new rulemaking--a new approach to mergers. My 
first boss was pretty exacting, and he always was on to me 
because I always gave him excellent work and prided myself--I 
am a recovering lawyer--I will say, prided myself in getting to 
the right answer. But he pointed out to me once after waiting a 
long time for the right answer, that time is an element of 
quality, and on that, I had failed.
    This is my criticism of this process, and I would like you 
to respond to it, is that delayed time, even if you are getting 
to a perfect answer, makes that answer, frankly, imperfect, and 
that is really what I am trying to get at. And I wonder if you 
might respond to that and what impetus is there for you all to 
do this in a timely fashion?
    Mr. Dowd. I agree completely that a timely response is a 
critical part of being an effective lawyer. With respect to the 
particular issue we are discussing, I think it is important to 
marry the first piece of what I said with the policy statement 
that is attached to the OCC's NPR, and in that policy 
statement, we at the OCC identify features that are consistent 
with a timely decision on a bank merger application. There are 
a list of them, I won't bother to read through all of them, but 
critically on that list is that there are no Bank Secrecy Act 
issues and there are no fair lending issues, no CRA issues. But 
with respect to Bank Secrecy Act/Anti-Money Laundering (BSA/
AML), if an application comes in and it is clean, we are 
prepared to act in a timely fashion with respect to that piece 
of it.
    Mr. Rose. Thank you, and I see my time has expired. I do 
implore you to move as quickly as possible in this process. 
Thank you, Mr. Chairman. I yield back.
    Chairman Barr. The gentleman from Illinois, Mr. Casten, is 
recognized.
    Mr. Casten. Thank you, Mr. Chairman, and thank you to our 
witnesses. I guess I have some high-level questions and 
observations, and you, hopefully, will agree with my 
observations on the front end.
    I am broadly very supportive of stringent reviews of merger 
activity for financial stability reasons and for antitrust 
reasons as well. As I think about your jurisdiction as you look 
at a merger, it strikes me that both of you are primarily 
focused on banks being able to carry out their functions, 
whether AML, as you have mentioned many times, or the stability 
of the bank and the banking system, and, to a somewhat lesser 
degree, the antitrust questions, which I think sort of tip into 
DOJ jurisdiction. And I guess what I am wondering is, all of 
our discussion today has been focused on your narrow 
jurisdiction. To what degree are you coordinating with the DOJ 
or the FTC or other antitrust authorities when you make these 
decisions, just at a high level?
    Mr. Anderson. On a high level, on any merger, we have to 
get a report from the Department of Justice. So we coordinate 
with them in that manner, if you will, but we do have to make 
our own independent determination, if you will, on those 
competitive concerns.
    Mr. Casten. Okay. And they would have to sign off as well 
before your process is done?
    Mr. Anderson. We have the authority to move forward on our 
own.
    Mr. Casten. In all cases?
    Mr. Anderson. In all cases.
    Mr. Casten. Okay. So maybe, that then gets to the two 
scenarios that I am struggling with in my head. You have one 
which always gets the press in the news that there is an 
emergency sale--it is SVB, it is Signature, it is Merrill 
Lynch, it is Lehman--and all of a sudden, there is a big bank 
with a robust balance sheet, and you have to move quickly to 
get in, and then after the fact, we say, well, did this lead to 
greater banking concentration? That is one set of questions 
that strike me where you have a tension between your 
obligations from a stability perspective and how you think 
about antitrust, and I guess what you are saying is you can 
make that decision unilaterally.
     Would you ever make that decision and say, once the dust 
settles, we have to go through and separate this back out to 
avoid some of the industrial concentration questions that 
arise?
    Mr. Anderson. I am not sure how I would answer that 
question. That is a fair question. That is something I would 
have to think about.
    Mr. Casten. Because the implication there is that antitrust 
is ignored in the moment and maybe is appropriate to be ignored 
in the moment. Maybe there is only one bank that has the 
liquidity to carry this out, but it sounds like there is never 
an example where you unwind it afterwards.
    Mr. Anderson. I think you are talking about an extreme 
situation, when you are talking about a potential failure, and 
that certainly raises a number of different issues that indeed 
some of what you have raised. I would have to think a little 
more about the question itself.
    Mr. Casten. That gets to the second scenario that I am 
struggling with a little bit, that as you look at existing 
networks of mergers that are--some that we have talked about in 
this hearing, and others that we don't know about yet, but 
someone is going to announce next week and you will have to get 
your pens out again. I think the size of all those mergers from 
an asset concentration, from a deposit concentration, whatever 
you want to measure, pales relative to the growth and deposit 
base of JPMorgan and the Bank of America. And so, from a 
concentration perspective, the organic growth in those banks 
seems to dwarf what is happening on the merger side.
    And I don't say that in any way to suggest that you 
shouldn't be vigilant on the mergers, but how do you deal with 
a scenario if you are saying, from a purely antitrust 
perspective, that the factors driving concentration are not 
issues that would trigger a review on your part. But on the 
other hand, the factors that are creating scenarios where 
someone might be a competitor to those large players to trigger 
a review, how do you think about that from an antitrust 
perspective?
    Mr. Anderson. Again, that is a very interesting question. I 
would have to get back with you on that. I'm sorry.
    Mr. Casten. I will be the guy guilty of asking interesting 
questions. I would love to know how you think about those 
because, to come back to what I said at the start, I think 
there is a tension between short-term stability and antitrust 
measures. I want to believe that our regulators, and the 
coordination across the regulators is doing that trade off 
because if you are not, then it is on us to figure out how to 
do it. And don't get me wrong, some of us are really smart, but 
I want to make sure that the people who are down in the weeds 
are in the lead on that. I welcome the chance to follow up with 
you offline, and I yield back. Thanks.
    Mr. Anderson. If you provide that question to us in 
writing, we will certainly call.
    Chairman Barr. The gentleman from Wisconsin, Mr. 
Fitzgerald, is recognized.
    Mr. Fitzgerald. Thank you, Mr. Chairman. Some of these 
questions may be a little redundant, but rephrasing Mr. Posey's 
question about whether or not you gentlemen ever worked in a 
bank, I think that is significant. It has become more 
significant because I am having a really hard time here this 
morning understanding how hands-on this process is, if it is 
hands-on at all. But as we know, mergers require significant 
upfront and ongoing investment and a commitment of resources, 
and that includes kind of finding a target, conducting due 
diligence, and negotiating the terms of the transaction. Once a 
target is identified, the banks have to prepare the appropriate 
regulatory filings, engage with regulators, and prepare for the 
post-approval business process.
    Given all the upfront work that happens in a merger, it 
should come as no surprise that few deals are really blocked, 
because everything is kind of in order. So, let me ask you 
this. Do the FDIC and the OCC currently believe the lack of 
denials of bank mergers means that the framework is working, or 
is it clearly ineffective at this point? M
    Mr. Anderson, I would ask you to go first on that.
    Mr. Anderson. I think we believe our framework is working. 
I think, ultimately, we are evaluating the statutory factors 
and coming to conclusions on that. Our process is such that, to 
the extent that a merger is not going to meet the statutory 
factors, it is a very iterative process, we would talk to the 
institution and, frankly, let them know that we would be 
recommending potentially a denial, and in many instances, 
institutions withdraw. Overall, I think we believe that our 
process is actually working.
    Mr. Fitzgerald. Mr. Dowd?
    Mr. Dowd. Thank you for the question. It is a very good 
question and a question we should be asking ourselves on a 
regular basis. I agree with Mr. Anderson. The process is 
working, but I also recognize that there is always an 
opportunity for improvement and refinement. And that is the 
exercise that the OCC is engaged in right now, and one that I 
would suggest that all of the Federal banking agencies and the 
Department of Justice should engage in from time to time.
    Mr. Fitzgerald. I don't think there is any doubt that the 
consequences of the merger delays have a significant impact on 
the banks involved, causing greater operational risk. 
Certainly, expenses are going to increase as there is a delay, 
and then the reputation of the bank. If you are a customer of 
that bank, and we know how this works, there is kind of this 
rumor mill that starts about who is going out of business and 
who is going to remain in business, am I going to have to 
switch accounts, am I going to have to get a new debit card? 
All of these things happen in this process, and this is not 
just a problem of the big banks. Obviously, for a smaller bank, 
it is probably more significant.
    So the uncertainty in the merger process limits 
opportunities, I would say as well, but the banks just can't 
simply hit the pause button. They must continue to market their 
services, market their brand, and make sure that they are still 
in business. It is a business, right? So, how do you consider 
the costs of delays? Have you looked at these, have you 
examined these and said, this is a problem for us if it is 
having that type of impact on banks across the country?
    Mr. Anderson, have you looked at this?
    Mr. Anderson. We are certainly aware that at times, 
applications have not moved as quickly as we would like. I 
think that part of the proposed SOP and the updated Bank Merger 
Act interagency application form that we put out for public 
comment as well, part of that is to make it clear how we are 
going to evaluate the statutory factors as well as to let 
institutions understand, if you will, the type of information 
that we need to make a decision. And I think, ultimately, our 
hope is that by combining those two, we will come out with a 
more efficient process and be able to move some of those 
applications faster.
    Mr. Fitzgerald. Mr. Dowd, is there any sense of expediency? 
Is there any awareness of the impact you could be having on a 
bank if, in fact, this work can't be done and done quickly?
    Mr. Dowd. We are keenly aware of the issues that you have 
raised. On the spectrum of small institutions, we process 
those, in general, very quickly, very efficiently. With respect 
to the larger institutions, those transactions are more 
complex, and complexity drives timing. For a clean transaction 
involving large banks, we have the ability to move very 
quickly, and we are, again, keenly aware of the benefits, and 
sometimes you need to move quickly on that front. But a lot of 
it is dependent on what comes in on the application, and to the 
extent that application arrives, that introduces----
    Chairman Barr. The gentleman's time has expired.
    Mr. Dowd. ----safety and soundness and risk concerns for 
what would be the resulting institution----
    Chairman Barr. The gentleman's time has expired.
    Mr. Dowd. ----we want to ensure that we are on top of those 
so that the ultimate institution that is approved----
    Chairman Barr. I'm sorry. The time has expired. The 
gentlewoman from Massachusetts, Ms. Pressley, is now 
recognized.
    Ms. Pressley. Thank you, Mr. Chairman. Today's subcommittee 
hearing is entitled, ``Merger Policies of the Federal Banking 
Agencies.'' The world of bank mergers and acquisitions really 
may seem abstract for the everyday consumer, so I wanted to 
just dial in on why this matters. The lack of bank competition 
has real impacts that directly affect the interest you earn on 
your savings account, your monthly mortgage, or your car loan, 
ATM fees, and credit affordability, to name a few, and for 
workers, it is well-documented that bank mergers often lead to 
bank branch closures and job losses.
    It is well past time for bank regulators to review bank 
mergers through an antitrust lens and with a consumer 
protection perspective. Failure to do so for decades has lined 
the pockets of bank executives and shareholders while the 
American public, whether urban, rural, or suburban, has 
suffered and has seen costs rise.
    In 1994, in the United States, there were over 14,000 
banks. Today, in 2024, 40 years later, there are just 4,000, 
and the 6 largest banks control more than half of the total 
assets. This decline is not a coincidence nor happenstance. 
Rather, it is a direct consequence of bank regulators' failure 
to enforce antitrust laws in the banking sector. From 2006 to 
2021, the Federal Reserve reviewed over 3,500 bank mergers and 
approved every single one of them. This series of policy 
choices has weakened our financial system, caused consumer 
harm, and reduced competition among banks.
    Mr. Anderson, and Mr. Dowd, bank mergers, in so many cases, 
have proven to harm consumers with higher prices and more fees, 
lower deposit rates, less access to credit, and bank branch 
closures, which I care about. I represent a district in 
Massachusetts, the City of Boston, where 10 percent of my 
constituents are unbanked, and 20 percent are underbanked, and 
where there are bank branch closures and job cuts. What steps 
are the FDIC and the OCC taking to ensure that customers, 
especially those from communities of color, and low- and 
moderate-income communities, are not getting the short end of 
the stick?
    Mr. Anderson. It is a fair question, Congresswoman. I think 
that as we analyzed the Bank Merger Act factors, the primary 
ones that you are talking about, their effects on competition 
and convenience and ease of a community with respect to 
branches and the like, and to what extent those merged entities 
are serving low- and moderate-income communities. I think, as 
we look at what the resulting transaction is going to look 
like, we are going to try to ensure that, ultimately, those 
services are carried through. We look at the business plan of 
the resulting institution over 3 years to take a look at the 
branches that they are suggesting they are going to close as 
well as open. So I think, ultimately, we will be looking at 
those concerns and the resulting transaction.
    Ms. Pressley. Okay. Mr. Dowd, while I appreciate that the 
OCC issued its proposal to strengthen bank merger reviews in 
January, some experts have said that your proposal is not as 
strong as a proposal that the FDIC issued. Are you concerned by 
the differences in your proposal from the FDIC's, and is your 
agency open to incorporating more forms put forward by the FDIC 
in their own proposal?
    Mr. Dowd. The OCC is open to receiving comments from all 
stakeholders who are affected or have an interest in our NPR, 
so that would absolutely include consumers of banks, community 
groups, all of the communities and people that you have 
identified, and we welcome those comments. We want those 
comments. Procedurally, it is a notice----
    Ms. Pressley. Thank you. I'm sorry. I have one more 
question I want to get in on the record. Apologies for 
interrupting. My time is lapsing here. Mr. Dowd, can you speak 
to how the OCC is considering financial stability and merger 
reviews?
    Mr. Dowd. It is one of the statutory factors that we are 
required to consider. We do consider it, consistent with our 
statutory obligation, and we coordinate with our peer 
regulators at the Federal Reserve and, when appropriate, with 
the FDIC. I will say, in a technical manner, there are often 
numerous legal entities involved, so we will work with that on 
the holding company piece.
    Ms. Pressley. Okay. Thank you.
    Chairman Barr. The gentlelady's time has expired. The 
gentlelady from California, Mrs. Kim, is recognized.
    Mrs. Kim. Thank you, Mr. Chairman. And thank you to our 
witnesses for spending time with us this afternoon in our 
subcommittee.
    My concern is that there is no consistency in the bank 
merger review process, and the methods for approving or 
disapproving are very opaque. I want to ask a question to both 
of you. Will you please describe the efforts that your 
respective agency is doing to improve predictability, 
transparency, and efficiency in the merger review process?
    Mr. Anderson. I think that is the very purpose of our 
proposed SOP that is out today or that is out now. It is really 
to lay out how the FDIC approaches each of the statutory 
factors, and, for lack of a better way to say it, to provide 
some meat on the bone, if you will, so that people can 
understand how we do that. It is also an opportunity, if you 
will, for us to make it clear the type of information that we 
are going to want from applicants who are seeking to merge. So, 
I think those are the steps that we have taken.
    Mrs. Kim. Sure. Mr. Dowd?
    Mr. Dowd. I agree with that, and I will say at its core, 
that is what the OCC NPR and policy statement is after. We are 
looking for ways to improve transparency and predictability 
with respect to bank merger applications and how they are 
processed, and to that end, again, if you look at the policy 
statement, we identify features that, if you have these 
features, those are consistent with a timely decision on a bank 
merger application. If you are deficient in one or more of 
those features, that is going to require and necessitate more 
time to ensure that if we are approving an institution, that 
the institution we are approving ultimately has the financial 
and managerial resources, systems and controls, et cetera, to 
operate in a safe and sound manner and to serve the needs of 
its community.
    Mrs. Kim. Both the FDIC's and the OCC's recent proposals, 
as I reviewed them, seem to indicate that predictability and 
transparency are not the end goals. So, Mr. Anderson, in your 
FDIC proposal, there is a requirement that the combined bank 
better meet the convenience and the needs of the community 
served by combined entities. How will the applicants be able to 
predict what the FDIC considers better meeting the needs of the 
community?
    Mr. Anderson. I think we have tried to lay that out a 
little bit in the proposal. That is certainly something new 
and, frankly, we are seeking comments on that, so I am 
certainly interested in getting comments as we move forward. I 
think that we talk about in the proposal that that can be met 
in terms of increased lending limits, new products, and the 
like, so those would be ways in which the resulting institution 
can show that they are going to better meet the needs of the 
community.
    Mrs. Kim. And, Mr. Dowd, one focus of the OCC's proposal is 
on the job losses or reduced job opportunities resulting from 
the mergers, so will the OCC provide further clarity on what 
would be considered acceptable or unacceptable job losses?
    Mr. Dowd. Again, it is a notice of proposed rulemaking, so 
I can't predict where a final rule will go. Obviously, the 
Administrative Procedure Act has rules on what we can say, and, 
more importantly, we don't want to front-run the process. But 
the issue you raise is a very good issue, and we would welcome 
comments on that point, and we will take those comments very 
seriously when we decide how we construct and shape the final 
rule.
    Mrs. Kim. Thank you. We are still seeing the ripple effect 
of record-high inflation and high interest rates, and we saw it 
with Silicon Valley Bank and First Republic Bank last year, and 
we are seeing it with a number of other banks, like Republic 
Bank in Pennsylvania, this year. My view is that we should make 
it easier for some of the troubled banks to have an offramp 
before it is too late to act.
    So, would both of you speak of the financial stability 
considerations that you take into account during the merger 
review process? Do you consider the risk to financial stability 
when a merger is not approved?
    Mr. Dowd. We do consider financial stability in a merger 
application. It is statutorily mandated that we consider 
financial stability. So in that vein, we consider the size of 
the resulting institution, the interconnectedness of the 
resulting institution, the complexity of the resulting 
institution, and if there is cross-border activity, what that 
cross border activity is, and also ultimate resolution.
    Mrs. Kim. Thank you. I think my time is expiring, so I just 
want to encourage both of you to consider the risk on both 
sides of the aisle. Thank you again. I yield back.
    Chairman Barr. The gentlelady yields back. The gentleman 
from New York, Mr. Meeks, is recognized.
    Mr. Meeks. Thank you, Mr. Chairman. I want to thank both of 
you for being here today and for your testimony, and I have 
been listening upstairs and back and forth. This is, I think, a 
very important hearing with very significant and important 
ramifications.
    When I look at what is going on, I generally believe that 
bank mergers should be assessed on the merits, particularly the 
individual application put forth and trying to determine also 
what is in the best interest of the consumer, and on the other 
side, so that way you can judge each on its merits as opposed 
to just, it is only to see.
    Also, if the application meets the regulatory criteria that 
is outlined after a thorough review by all, and if that is the 
case, then it may be fair that a merger be allowed to proceed. 
So to that degree, I want to appreciate that the OCC and the 
FDIC are working to provide more clarity because I also hear in 
these cases the question is about clarity, which is important 
to a lot of folks. So, clarity around what this process is, I 
think is very important, and you trying to provide that clarity 
is important.
    Now, that being said, also from a big picture standpoint, 
the consolidation of the banking industry is very concerning to 
me. Community and regional banks play an essential role in a 
district like mine and, thereby, affect my constituents. The 
diversity of our banking ecosystem is one of the greatest 
strengths, and when a bank branch closes and we start to get 
banking deserts in my neighborhood, the neighborhood really 
feels it.
    Mr. Dowd, in your estimation, what is the impact of a more 
consolidated banking industry, and how does this consolidation 
affect our communities, and to what extent are these factors 
taken into account when assessing a proposed merger?
    Mr. Dowd. Thank you for the question. Let me start by 
saying that I absolutely agree that a merger application should 
be assessed on its merits. With respect to the statutory 
factors that shape the consideration on the merits, convenience 
and needs is critical, and as part of that, I think we look at 
how financial services and banking services are delivered to a 
particular community. Obviously, the banking world and the 
financial services world has evolved in recent years, over the 
last 5 years, over the last 10 years. But ultimately, the 
question is, is the community getting the financial services, 
and do they have access to the financial services that they 
need consistent with the convenience and needs factor set forth 
in the Bank Merger Act statute.
    Mr. Meeks. Mr. Anderson, what is your viewpoint?
    Mr. Anderson. I would agree with what Mr. Dowd said. That 
is something that we certainly look at as we kind of evaluate 
the convenience and needs statutory factor. You mentioned 
branch closings and concerns in communities regarding that. 
That is something that we would take into account when we look 
at an application. We look at that application over kind of a 
3-year period, if you will, and try to get an understanding of 
what the proposed branch closings are. And as Ted mentioned, we 
would really want to make certain that those communities, to 
the extent that branches are closed, are still going to receive 
banking services appropriately.
    Mr. Meeks. Do you anticipate that this big picture dynamic 
will play a larger role in the final proposal of reforms of 
your merger and acquisitions review policies?
    Mr. Anderson. You would have to kind of bring me back to 
the big picture part that you are talking about.
    Mr. Meeks. So, the big picture is trying to look at these 
mergers individually to make the assessments that we are 
talking about in regards to----
    Mr. Anderson. Yes. I think we do have to look at every 
merger based upon its own kind of factors, if you will, and 
make that determination.
    Mr. Meeks. Let me quickly shift, because I see we are 
running out of time, to the FDIC meeting that took place last 
week where two proposals relating to bank control were 
considered. And at the meeting, Acting Comptroller Hsu remarked 
that instead of creating opportunities for a turf battle, the 
prudential regulators, namely the OCC, the FDIC, and the 
Federal Reserve, should enhance their coordination and develop 
a unified interagency approach to address issues related to 
bank control.
    Mr. Dowd, I think you were there. Can you elaborate on why 
is that so critical to achieve?
    Mr. Dowd. I apologize, Mr. Meeks. I am not quite sure I 
follow the question.
    Mr. Meeks. At the FDIC meeting last week, Comptroller Hsu 
remarked that instead of creating opportunities for a turf 
battle, people trying to fight for the various turf--I am 
seeing that I am out of time--the prudential regulators, the 
OCC, the FDIC, and the Federal Reserve should enhance 
coordination, talking among themselves, so that there is 
clarity.
    Chairman Barr. The witness can respond for the record. The 
gentleman's time has expired. It is a good question, though, so 
we would appreciate you responding for the record.
    The gentleman from Tennessee, Mr. Ogles, is now recognized.
    Mr. Ogles. Thank you, Mr. Chairman, and thank you to the 
witnesses for being here. As most things run by the Federal 
Government, the existing bank merger review process is slow, it 
is unpredictable, and it is opaque. I think we are going to all 
agree that it is important for bank merger policies to 
encourage competition, which is one of the pillars of the free 
market, yet not encourage increased regulations, including 
those required by the Dodd-Frank Act, that would result in 
driving banks to merge to afford compliance with burdensome 
regulations.
     And I think that is one of the things to note here is that 
when you look at the larger banks versus your mid-sized to 
large regional banks, the compliance costs are 
disproportionately higher for the smaller and mid-sized to 
regional banks, right? But competition is vital because it 
naturally generates cost savings in the market that can be 
passed on to consumers in the form of reduced fees.
    My question for you both is, would it be helpful for 
consumers, businesses, and financial stability overall if there 
was increased competition with the largest banks, including the 
global systemically important banks (G-SIBs)? Please explain, 
Mr. Anderson.
    Mr. Anderson. I think overall, competition is a good thing. 
I would have to look a little bit closer on the question kind 
of in the nuances that you mentioned, but overall, I think 
competition is a good thing in that respect.
    Mr. Ogles. Mr. Dowd?
    Mr. Dowd. I agree wholeheartedly with Mr. Anderson that 
competition is a good thing. The devil is in the details with 
respect to the issues you raised, but I think we are perfectly 
happy and would like to engage on that front.
    Mr. Ogles. For both of you, when you look at the regulatory 
regime and how it impacts your mid-sized and regional banks, 
and when you look at rural areas, it is often your regional 
banks that are your first lender, your first option. How is 
regulation hurtful to the banking system? Mr. Anderson?
    Mr. Anderson. I am not certain I would call regulation 
hurtful. I certainly understand that compliance can be costly, 
and I think that is kind of what you are getting at. So I 
think, ultimately, as we move forward, our proposal is to try 
to make it clear with respect to bank mergers what we expect, 
if you will, and how we are going to view these statutory 
factors and, hopefully, to the extent that we are talking about 
a bank merger, make those costs go down, if you will, because 
they will have an understanding of what type of information we 
are going to require.
    Mr. Ogles. What I would like to point out is, some of my 
colleagues have pointed out that you have these banking 
deserts, but in some cases, it is the regulatory regime that is 
forcing the mergers because of the increased cost of 
compliance. So whereas, the intent may be good to try to 
regulate a space or an industry, in fact, it is creating more 
harm than benefit. What is your response to that?
    Mr. Anderson. It is a fair point. I certainly have heard 
those types of concerns. I think those are the types of 
comments that we would like to receive as part of our proposed 
statement of policy, so I would welcome those comments.
    Mr. Ogles. Mr. Dowd?
    Mr. Dowd. I agree with Mr. Anderson. I would say that 
regulation can be helpful at times. It can be a positive. In 
fact, most of the time it is a positive, but I think there are 
some issues----
    Mr. Ogles. But when the regulation creates banking deserts 
or limits access to credit, is it helpful?
    Mr. Dowd. It is a very fair point that you raised. I would 
like to talk in more detail about what the specific regulations 
are and what the specific communities are that are being 
affected, but I think that the issue raised is fair and valid, 
and the OCC and my office would be happy to engage with you on 
that.
    Mr. Ogles. Mr. Chairman, you and I had spoken offline on an 
important point, and, if I may, I will yield you the rest of my 
time so you can discuss with the committee what you and I 
talked about.
    Chairman Barr. Thank you to my friend from Tennessee. Last 
Congress, the CEOs of the G-SIB institutions were before this 
committee, and I asked Mr. Moynihan, the CEO of Bank of 
America, which institution was a greater competitor to Bank of 
America--SunTrust alone, BB&T alone, or Truist, a combined 
institution--and his testimony was undoubtedly Truist. So, 
mergers sometimes can create competition, not undermine 
competition, as that testimony demonstrated.
    And I think, Mr. Dowd, Acting Comptroller Hsu has agreed 
saying that there should be competition among large banks, and 
simply prohibiting mergers of banks really locks in the 
concentration among the existing megabanks, and I don't think 
that is the right answer. That was a good point from the Acting 
Comptroller. How should we reconcile that sentiment with the 
OCC's proposal to impose a $50-billion size trigger for the 
presumptive denial of an application?
    Mr. Dowd. Can you clarify where we said that there was a 
presumptive denial on $50-billion transactions?
    Chairman Barr. My time has expired, so you can submit your 
answer for the record, but it is principle number two under 
your guidance, that the resulting institution will have total 
assets of less than $50 billion. So, your new guidance, your 
new proposal sets a $50-billion trigger for a presumption of a 
denial.
    Mr. Dowd. I am happy to look at that, and follow up with 
your office. I am not quite sure I would look at it the same 
way as a presumption of denial, but I think your question is 
fair and we will follow up with you on it.
    Chairman Barr. Thank you.
    Chairman Barr. The gentlelady from Ohio, Mrs. Beatty, is 
recognized.
    Mrs. Beatty. Thank you, Mr. Chairman, and Madam Ranking 
Member, and thank you to both of our witnesses for being here 
today.
    Let me start with you, Mr. Anderson. I would like to start 
where we can talk about enhanced security and financial 
stability. With the FDIC's consideration of enhanced scrutiny 
of mergers that result in banks with $100 billion in total 
assets, can you discuss the FDIC's reasoning behind this 
potential enhanced scrutiny?
    Mr. Anderson. I am not certain I would describe it as 
enhanced scrutiny, but I think, ultimately, what we are saying 
is that might result in an institution over $100 billion, 
because of the size and complexity oftentimes resulting in 
those institutions, they, in fact, may have a greater concern, 
if you will, as it relates to financial stability. So, I think 
we would look at it in that light. Again, it is out for 
comment, and to the extent that is not the appropriate line, we 
would certainly appreciate getting feedback on that.
    Mrs. Beatty. Okay. Is this related, do you think, to the 
recent regional bank failures that we saw last year, and if so, 
how will enhanced review promote financial stability?
    Mr. Anderson. Certainly, we learned a lot from the recent 
failures, and, indeed, it is pretty clear that institutions of 
that size could have a significant impact if they were to fail, 
so I would certainly say we have learned something from that. 
And indeed, that $100-billion mark is, as I said, something 
that is out for proposal, but it is certainly something that we 
have to consider.
    Mrs. Beatty. Mr. Dowd, continuing in the same vein, is the 
OCC considering adding a similar enhancement for mergers 
resulting in banks with more than $100 billion?
    Mr. Dowd. The OCC has a notice of proposed rulemaking and a 
policy statement that is out for comment. We are open and 
receptive to all comments, including comments that raised that 
issue and the threshold you put forward.
    Mrs. Beatty. Okay. Can you discuss other ways that the OCC 
is considering financial stability in its merger review?
    Mr. Dowd. With respect to merger reviews and the financial 
stability prong of the Bank Merger Act, the OCC considers it at 
the bank level, and then we also coordinate with our peer 
regulators at the Federal Reserve, presuming there is a holding 
company in the transaction. I would say there is almost 
exclusively a holding company with respect to the larger 
transactions.
    We are also engaging with the FDIC, and we are considering 
the financial stability factors that were articulated earlier: 
the size of the institution, the sustainability of the 
institution, and interconnectedness is obviously very important 
for us on that front; the complexity of the institution; the 
systems and controls at the institution in order to ensure 
compliance with applicable laws; and also, the geographical 
scope of the institution both domestically and internationally.
    Mrs. Beatty. Okay. Thank you. Mr. Anderson, I know there 
has been a lot of focus on mergers of large banks. I would like 
to ask about the merger of smaller banks. Many recent merger 
deals include and produce, let's say, $20 billion to $100 
billion asset range that falls short of that threshold for 
enhanced prudential regulations. For example, UMB and Heartland 
announced a deal just a few days ago that will create a 
multistate bank, a $60-billion bank. In many cases, as in the 
UMB deal, it will produce a bank that has a heavy concentration 
of commercial real estate loans, in some cases upward to 40 
percent, that regulators would not allow in a bank subject to 
the additional enhanced supervision. Do you have any thoughts 
on this, or should we be more concerned about this?
    Mr. Anderson. I can't speak to a specific deal, but just 
generally speaking, I think that as a bank supervisor who 
examines these institutions, we certainly are going to take 
those type of things into consideration. Whether it is 
commercial real estate (CRE) loans or whatever it may be, those 
are things that the FDIC and all the banking regulators take a 
look at in our supervisory capacities.
    Mrs. Beatty. Okay. Thank you, and my time is up.
    Chairman Barr. The gentlelady's time has expired. The 
gentleman from South Carolina, Mr. Timmons, is recognized.
    Mr. Timmons. Thank you, Mr. Chairman, and I want to thank 
the witnesses for being here today.
    Mergers within the financial sector promote competition and 
generate a robust landscape with banks that vary in size to fit 
all individuals' needs. The White House and my colleagues 
across the aisle take a different view in which they believe 
bank mergers are leading to runaway consolidation and feel that 
the government merely serves as a rubber stamp to these 
transactions when, in fact, the process is already quite 
strenuous.
    The new proposals levied as a result of Executive Order 
14036 are only going to make the merger application process 
more opaque than it already is, creating unnecessary strain on 
compliance departments and the workforce. Instead of 
streamlining an already-difficult process, it appears your 
agencies are seeking to make it more difficult.
    Mr. Dowd, as part of its proposal, the OCC proposes 
eliminating the expedited review process. Would you explain why 
simple mergers or acquisitions that pose no competitiveness or 
other risks could not be adequately reviewed in an expedited 
manner?
    Mr. Dowd. Thank you for the question. It is a good 
question. For simple transactions, the OCC does process those 
transactions on a timely basis, on a quick basis, and I would 
expect that to continue. I think what the NPR does is it tries 
to put a little more color and contour around those 
transactions that are, for lack of a better description, simple 
vanilla, do not raise significant supervisory issues, and 
affirms that those transactions can be handled on a timely and 
quick basis. The other part of what the NPR does, and 
specifically in the policy statement, is it identifies features 
with respect to transactions that are features that if they are 
not met, could lead to, and I should say, will lead to enhanced 
review. For example, an application----
    Mr. Timmons. I just want to be clear. Are you eliminating 
the expedited review process or are you not?
    Mr. Dowd. I think the best way to think about it is, it is 
being reframed and it is being explained in more detail.
    Mr. Timmons. Okay. I appreciate that answer. I'm not really 
sure I understand it, so I might have some follow-up questions. 
I appreciate the fact that your agency's proposal contains a 
statement of the OCC's General Principles for Merger Reviews, 
including 13 indicators that are positive in applications that 
the OCC would generally approve, and 6 negative indicators in 
applications that the OCC would generally deny. Keeping it high 
level, could you please give me a few examples of positive and 
negative indicators and explain the rationale behind it?
    Mr. Dowd. Sure. Let me start with the rationale and we can 
go to the factor. The rationale is, what is the resulting bank 
at the end of the transaction, and if the resulting bank is an 
institution that we have looked at in the application process 
and we are confident that the bank coming out at the end of 
that transaction can operate in a safe and sound manner, can 
comply with applicable laws and regulations, is able to meet 
its fair lending needs, has a CRA program, et cetera, clean, 
then that is the type of application that is consistent with 
timely processing.
    On the other hand, if you look at any of those factors, for 
example, if there is a fair lending issue for one of the banks 
in the transaction, if there is a BSA/AML concern with respect 
to one of the banks in the transaction, that warrants 
heightened scrutiny because, ultimately, what you are looking 
at is the safety and soundness of the institution coming out at 
the other end.
    Mr. Timmons. Thank you for that. Mr. Anderson, unlike the 
OCC, the FDIC does not clearly list the indicators it considers 
when approving mergers in their latest proposal. Why did the 
FDIC decide on this approach, and could you discuss how your 
indicators compare and contrast to the OCC's?
    Mr. Anderson. I think that what we try to do is lay out how 
the FDIC is going to approach the statutory factors as well as 
lay out the type of information that we want from proposed 
applicants. And I think we are trying to put a little bit more 
meat on the bones so that the applicants understand kind of how 
we are going to view those statutory factors on a going-forward 
basis. And I think, ultimately, we are hoping that the 
combination of that plus the information that we are going to 
receive will provide for a more efficient process.
    Mr. Timmons. Thank you for that. Mr. Chairman, I yield 
back.
    Chairman Barr. The gentleman yields back. The gentleman 
from South Carolina, Mr. Norman, is now recognized.
    Mr. Norman. Thank you, Mr. Chairman. One of my questions 
was, do regulations affect mergers? I can tell you right off 
that they do. I was on a bank board for a number of years, and 
we couldn't merge, just when the bank failures were taking 
place, I think 15 years ago, with the Troubled Asset Relief 
Program (TARP) in effect, and we couldn't buy banks and provide 
banking services because of what it was going to cost in 
personnel cost alone to administer the regulations. It has only 
gotten worse since the Biden Administration has been in office. 
What is the average time that you would say, assuming you have 
all of the documentation, to review a merger application?
    Mr. Anderson. I can't speak for every year at the FDIC. I 
can say that in 2023, the average time from the point in which 
an application is deemed substantially complete has been 
approximately 68 days. In 2002, that was approximately 59 days.
    Mr. Norman. Mr. Dowd?
    Mr. Dowd. Thank you. I do not have that data in front of 
me. I will say, in general, for transactions that involve 
smaller institutions, our turnaround time is quite quick and 
efficient. For larger, more complex transactions, it can take 
longer, but I am happy to follow up with your office with more 
detailed data.
    Mr. Norman. The best way for us to be, and I understand 
that you all need specifics to go by. If we write you a list of 
concerns that we have with regulations that are in place for 
you to respond to and I guess give a rationale for why they are 
in place because time is money in banks, and I have had banks 
in all this week that are very concerned about the time for 
bank mergesr that it takes to review and that it puts the whole 
banking system in limbo. So, is that the best way for me to do 
that?
    Mr. Dowd. We are always happy to have a dialogue, so if 
your office wanted to submit a letter, we would be more than 
happy to take a look at it, respond, and if additional 
discussion would be helpful, we are always open to that.
    Mr. Norman. Okay. Thank you. I think, as it has been said, 
we just need clear guidelines and expectations of what is going 
to be required, and it just hasn't happened, at least in the 
last couple of years. What do you see as the major issues to be 
resolved, and, I guess, what is the state of the progress and 
how do you think the issues will be solved for the new merger 
guidelines and the policies that are going to be proposed?
    Mr. Dowd. At the OCC, we have issued a notice of public 
rulemaking with a policy statement. The comment period on that 
is open until, I believe the middle of June. Once we get all of 
the comments and we evaluate them, we will then identify the 
issues and proceed on a path forward, but I don't want to 
prejudge the process.
    Mr. Anderson. At the FDIC, we have our proposed statement 
of policy on bank merger transactions similar to the OCC. It 
has a 60-day comment period. Our hope would be to get the 
comments in, review those comments, and then eventually find--
--
    Mr. Norman. What is the expected time to review the 
comments and to either modify or change the regulations?
    Mr. Anderson. I don't have a specific date that I am aware 
of. Again, it is going to be a function of the comments that we 
get and taking a look at those and trying to determine what 
changes, if any, we need to make.
    Mr. Norman. How many people review the comments?
    Mr. Anderson. I'm sorry?
    Mr. Norman. How many people review the comments?
    Mr. Anderson. It depends on the proposal.
    Mr. Norman. Mr. Dowd, do you have any comment on that?
    Mr. Dowd. Yes, that is exactly right. It depends on the 
rulemaking. It depends on the complexity of the comments. On 
one end of the spectrum, you have very complex rulemakings that 
generate quite literally thousands of comments, and then, there 
are rules at the other end of the spectrum that don't generate 
as much interest. We calibrate our staffing and our response 
with respect to the number and the complexity of the comments.
    Mr. Norman. Okay. Thank you. I appreciate you being here. I 
yield back, Mr. Chairman.
    Chairman Barr. The gentleman yields back.
    I would like to thank our witnesses for their testimony 
today. And, Mr. Dowd, just to finish the thought between you 
and Mr. Timmons, and with me, when Mr. Timmons is talking about 
the elimination of the expedited review procedures, and when I 
referenced this second factor on the 13 indicators about the 
resulting institution will have a total assets of less than $50 
billion, I understand the OCC's take on that is that it is not 
a presumptive denial for anything above $50 billion, but that 
is the inference that is being taken. So, that is the feedback 
that I would give you there. We will continue the conversation, 
and I appreciate the dialogue.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    I ask our witnesses to please respond as promptly as you 
can.
    This hearing is now adjourned.
    [Whereupon, at 12:07 p.m., the hearing was adjourned.]

                            A P P E N D I X
                            
                              May 1, 2024
                              
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