Bank Competition Modernization Act
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The Bank Competition Modernization Act would bar federal regulators from applying antimonopoly and competition standards when reviewing bank mergers that would result in an institution with less than $10 billion in total assets — a threshold adjusted annually for nominal GDP growth.
The change would affect how the FDIC, Federal Reserve, and related regulators evaluate a large share of community and mid-size bank mergers, removing a significant statutory hurdle that currently lets agencies block deals they find anticompetitive.
What this bill would do
What it would do
The bill would amend three federal banking statutes to prohibit regulators from considering whether a proposed merger, acquisition, or consolidation would result in a monopoly, further a conspiracy to monopolize banking, substantially lessen competition, or otherwise restrain trade — but only when the resulting entity would have less than $10 billion in total assets. This exemption would apply to mergers reviewed under the Federal Deposit Insurance Act, the Bank Holding Company Act of 1956, and the Home Owners' Loan Act, covering banks, bank holding companies, and savings and loan holding companies respectively.
The bill would not eliminate other merger-review criteria that regulators currently apply (such as financial safety and soundness, community reinvestment, or management quality). It also would not affect deals where the combined entity would exceed the $10 billion threshold. That threshold would be adjusted upward at the end of each year in which U.S. nominal gross domestic product increases, using Bureau of Economic Analysis statistics.
Key provisions
- 1Would prohibit the FDIC from considering monopoly, conspiracy to monopolize, or competition-lessening effects when reviewing mergers resulting in an institution with less than $10 billion in assets.
- 2Would prohibit the Federal Reserve Board from considering the same anticompetitive factors when reviewing bank holding company acquisitions, mergers, or consolidations under the $10 billion threshold.
- 3Would prohibit the Federal Reserve Board from applying competition criteria to savings and loan holding company transactions resulting in entities below the $10 billion threshold.
- 4Would require the FDIC and Federal Reserve Board to adjust the $10 billion asset threshold annually based on increases in U.S. nominal gross domestic product, using Bureau of Economic Analysis data.
Who would be affected
Community banks, mid-size banks, bank holding companies, and savings and loan holding companies whose mergers would result in combined assets below $10 billion — representing the vast majority of U.S. banking institutions by number. The FDIC and Federal Reserve Board would be directly bound by the new limits on their merger-review authority. Consumers and businesses in local markets where the merged institution would operate are also affected, as competition concerns would no longer be a basis to block qualifying deals.
Why it matters
For smaller banks and their merger partners, removing the anticompetitive-review requirement would reduce a meaningful regulatory obstacle and potentially accelerate consolidation. For communities served by those institutions, regulators would lose the statutory authority to reject a deal on grounds that it reduces local banking competition or tends toward monopoly — even if the merged bank dominates a regional or local market.
What would change
Changes to existing law
Amends Federal Deposit Insurance Act (12 U.S.C. 1828(c)) (Sec. 2(a))
Adds an exemption barring competition and monopoly review for mergers resulting in institutions with less than $10 billion in assets, with an annual GDP-linked threshold adjustment.
Amends Bank Holding Company Act of 1956 (12 U.S.C. 1842(c)) (Sec. 2(b))
Adds an exemption barring the Federal Reserve from applying antimonopoly and competition criteria to bank holding company mergers below the $10 billion asset threshold.
Amends Home Owners' Loan Act (12 U.S.C. 1467a(e)) (Sec. 2(c))
Adds a parallel exemption barring competition review for savings and loan holding company transactions resulting in entities below the $10 billion asset threshold.
Agencies directed to act
How implementation would work
The FDIC and Federal Reserve Board would apply the new rules immediately to pending and future merger applications that fall under the $10 billion threshold. Each agency would also be responsible for calculating and publishing the annually adjusted threshold using nominal GDP figures from the Bureau of Economic Analysis, applying the percentage increase between the highest GDP year in the preceding five years and the current year. No rulemaking process is specified; the changes are self-executing amendments to the relevant statutes.
Legislative status & sources
Latest action
Placed on the Union Calendar, Calendar No. 317.
Official CRS summary
Show the CRS summaryHide the CRS summary
This bill allows financial regulators to approve certain bank mergers without considering if the merger is noncompetitive or monopolistic.
Currently, regulators are prohibited from approving a bank acquisition, merger, or consolidation that would result in a monopoly, that would be in furtherance of a conspiracy or attempt to create a monopoly, the approval of which would substantially lessen competition, or that would otherwise restrain trade.
The bill prohibits regulators from considering these factors for mergers that would result in an entity with less than $10 billion in assets. This threshold must be adjusted annually to reflect increases in the U.S. nominal gross domestic product.
Legislative subjects
Bank accounts, deposits, capital; Banking and financial institutions regulation; Business records; Competition and antitrust; Corporate finance and management; Finance and Financial Sector; Performance measurement
Committee report
H. Rept. 119-365