While recent evidence suggests regulators may be softening their stance on bank M&A, Jonathan Kanter, the Justice Department's assistant attorney general for antitrust, recently announced his agency plans to amp up its scrutiny of industry mergers and consider a broader range of criteria when reviewing deals, such as customer service, fees, and interest rates. The "narrow focus on local market deposit concentration" is not sufficient, he remarked.
"Instead of thinking of a stressful scenario and then see how it would play through on, say, the balance sheet of a firm,” he said, “you look at a bank and you say: 'Well, what would it take to break this institution?'"
The potential change is part of a broader supervisory reform effort at the Fed.
Fed Chair Jerome Powell recently discussed how banks must strike a balance between the need to hold more capital and their ability to lend. He shared his views with the House Financial Services Committee last week, stating it would be unwise to regulate smaller banks to the point where their business models are stressed. Powell also emphasized that the Fed still has work to do to tame inflation.
In today's partisan political landscape, senators like Elizabeth Warren, D-MA, and J.D. Vance, R-OH, would appear to make strange bedfellows. But nothing unites the left and right quite like bank execs who rake in millions just before their institutions collapse.
Case in point: On Wednesday, a clawback bill for executive pay cleared the Senate Banking Committee in a 21-2 vote and will now head to the full Senate, where it's expected to pass. It will still need to make it through the GOP-controlled House, however.
Banks are still raising employee pay, struggling to find qualified applicants, and offering remote work arrangements, according to Bank Director's 2023 Compensation Survey.
“Forty-four percent of the bank executives and directors surveyed … cite tying compensation to performance as a top challenge this year.”
Last week, the CFPB issued two reports analyzing banking and consumer credit trends in the South, an eight-state region where roughly 7 million people have lived in poverty for at least 30 years.
Among the findings: There are fewer branches in the South than in other parts of the U.S., with Mississippi and Louisiana laying claim to the highest unbanked rates in the nation.
The American Bankers Association's Economic Advisory Committee, composed of bank economists, recently forecasted that credit conditions may likely soften in the months to come due to a slowing economy and elevated borrowing costs.
Loans may be harder to come by if borrowing costs increase and credit losses and defaults rise over the second half of the year, says the Committee.
Last week, the Federal Reserve published a list of firms that have access or are seeking access to the central bank’s master accounts and payment services.
The move follows calls from Republicans to make the central bank's process for granting accounts more transparent as a growing number of uninsured firms seek access to its payment systems. Former Sen. Pat Toomey (R-PA), who long claimed the central bank lacks accountability, inserted the provision into last year’s defense spending bill.