The US Justice Department’s antitrust division is planning a significant expansion in its bank merger review process. This move signals a potential increase in regulatory scrutiny on such deals, according to statements from the department’s head, Jonathan Kanter.
As the Assistant Attorney General for Antitrust, Kanter addressed the need for updating the existing guidelines, which were last modified in 1995. He expressed concerns about their potential inadequacy in today’s technology-driven financial services landscape. “There are good reasons…to question whether the 1995 guidance sufficiently reflects current market realities,” he said during a speech at the Brookings Institution.
The banking industry, which had been optimistic about President Biden’s administration being more open to deals after a series of bank failures, may find Kanter’s statements disappointing. Kanter emphasized that antitrust merger reviews should extend beyond traditional parameters like the effects on local depositors and branches. He further stressed that these reviews should take into account a wider range of issues.
Banks’ varying customer bases and the options available to them were highlighted as key points for consideration. Kanter noted that it is vital for customers to have a “meaningful choice” across different banking services. He also indicated that changes in banking practices impact numerous financial aspects for customers, from the interest earned on savings accounts to ATM withdrawal fees.
Noting the shift in market realities, Kanter underlined the Justice Department’s duty to respond to current conditions, saying, “when we apply the law, we have an obligation to ensure we are addressing the world as it exists today.”
This policy shift is in line with the administration’s previous stance. In 2021, Biden issued an executive order urging the Justice Department to increase its scrutiny of banking deals. However, this stance was met with resistance from some in the banking industry, who hoped recent rescue deals would highlight the benefits of allowing strategic transactions to support struggling lenders.
Kanter also implied that non-bank financial entities, like fintech and credit unions, may come under closer inspection. This news might offer a ray of hope to larger banks that have been grappling with competition from these tech entities.
This news is based on an article from malaymail.com.
