CFPB's Chopra Says Banks Should Expect Greater Scrutiny for Bank Mergers

In an interview this week, Consumer Financial Protection Bureau director Rohit Chopra suggested an end to “easy” bank mergers. According to Chopra, regulators plan to engage in stricter scrutiny of those mergers going forward. He cited concerns about financial stability and signaled that regulatory agencies will not just “rubber stamp” merger applications.

No more rubber-stamped bank mergers

Chopra’s remarks come at a time when he not only leads the CFPB, but also serves on the FDIC board. That regulatory body is directly involved in bank mergers. Still, his warning about stricter scrutiny of mergers seems at odds with recent comments from other regulators and government officials.

The CFPB head declared, "Banks can expect a more rigorous review of applications. The ink on the rubber stamp has dried up and... my hope is to see a shift from the regulators of moving from cheerleader to umpire.” He also suggested that regulators had failed to exercise “analytical rigor” when evaluating past merger requests.

Chopra has previously called on the FDIC to make modifications to its guidelines for bank mergers. In prepared remarks to the American Economic Liberties Project Anti-Monopoly Summit, he said:

“Given the central role of banking and finance in our economy, I’m hoping the FDIC will put forward a series of fixes to the Bank Merger Act guidelines, particularly when it comes to how we consider resilience and risks to financial stability.”

Meanwhile, Reuters reported this week that the nation’s banks are delaying many merger and acquisition deals until late 2024. According to at least one industry expert, potential buyers and sellers are “frozen in place” due to anticipated changes in rules governing mergers, capital requirements, and other regulatory-related concerns. Those experts also pointed to increasing regulatory delays in the approval process for bank mergers.