House Financial Services Committee ("Committee") Chair Maxine Waters (D-CA) asked the Federal Reserve Board ("FRB") and the FDIC to delay final decisions on the proposed merger of SunTrust Banks, Inc. ("SunTrust") and BB&T Corporation ("BB&T") until the Committee completes a review of the proposed merger.
Chair Waters stated that the merger of SunTrust and BB&T would create another megabank, the sixth largest bank in the nation. Chair Waters said the merger "warrants scrutiny" by Congress because of the "implications for the broader economy."
Chair Waters called on BB&T CEO Kelly King and SunTrust CEO William Rogers to provide clarification on the consequences of the merger, including: (i) how many of the 57,000 people working at the banks will lose their jobs, (ii) how many branches of these banks will be closed and (iii) what is the banks' commitment to diversity?
Commentary Steven Lofchie
The reality is that there are going to be a diminishing number of banks. Many factors are at play. Competition with the technology industry moving into finance (see BIS Urges Regulators to Address Emergence of Large Technology Firms in Financial Markets) and heavy regulatory costs that hurt small firms (made heavier by Dodd-Frank) result in the acceleration of the dimunition.
Speechifying that prevents or delays the merger of banking organizations might make for the appearance of "action" but is both futile and damaging. It will simply leave the banks in a weaker position, less able to adapt with the size necessary to compete and unable to spread regulatory costs. Reducing regulatory burdens would, on the other hand, provide some real help--but that's not likely to stop industry consolidation.
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