Summary
"The law says no bank merger can be allowed unless it benefits the public, yet regulators have largely failed to properly enforce that requirement." -- NCRC President & CEO Jesse Van Tol
Banking regulators should adopt much tougher rules in their merger review processes to ensure such deals benefit the public, more than 100 community development organizations wrote in a letter to regulators.
“Regulators have taken a light touch in reviewing bank mergers for decades, which has encouraged the industry to consolidate dramatically over the past quarter-century – with some harmful consequences for working-class families,” National Community Reinvestment Coalition (NCRC) President and CEO Jesse Van Tol said. “The law says no bank merger can be allowed unless it benefits the public, yet regulators have largely failed to properly enforce that requirement. Banks should bear the burden of proof when they ask the government to let them reduce the choices available to consumers – and regulators should use merger applications as leverage to push banks to serve communities.”
The NCRC-led letter details numerous specific ideas for improving the merger review process to prioritize community benefits, including the creation of “a rebuttable presumption that a merger will not [help the public]” which banks must formally disprove, an expanded competition analysis that “consider[s] all aspects of banking and not just deposit concentration,” and more robust accountability measures to ensure that merging banks fulfill commitments to the public. More than 100 other organizations signed onto the letter.
Merger review processes have received new attention from the Biden administration, which in a 2021 executive order promised to take a ‘whole-of-government approach’ to reviving economic competition across a wide range of sectors and industries. The banking industry is a prime example of the decline in competition that the White House is scrutinizing: There are now fewer than 5,000 banking institutions in the US, down from roughly 18,000 in the 1980s. Though the overall effects of this market concentration are complex, one clear negative consequence for consumers is the evaporation of physical bank branch locations – a long-term decline which dramatically accelerated starting in 2020.
The letter places special weight on community benefits agreements (CBAs), where bank executives meet with local leaders to craft specific bank commitments to serve community needs. No merger should be approved without an ambitious and enforceable CBA, the letter states.
The full letter can be read here. The following organizations joined NCRC in signing the letter:
National Groups
Consumer Action
National NeighborWorks Association
National Association of American Veterans, Inc.
Alaska
Alaska PIRG
Alabama
City of Birmingham
HICA
Montgomery Community Action Committee & CDC, Inc.
Roosevelt Southwest Community Development Corporation
St. Peter African Methodist Episcopal Church
Titusville Development Corporation, a CDC
Arizona
Local First Arizona
Pima County Community Land Trust
UPI Loan Fund
California
California Coalition for Rural Housing
California Community Economic Development Association
California Reinvestment Coalition
CAMEO
CDC Small Business Finance
EAH Housing
Latino Leadership Council
People’s Opportunity Fund
Stanislaus Equity Partners
The Greenlining Institute
Colorado
African American Trade Association
NeighborWorks Southern Colorado
Urban Land Conservancy
Delaware
Delaware Community Reinvestment Action Council, Inc.
District of Columbia
Coalition for Non-Profit Housing and Economic Development
Florida
Affordable Homeownership Foundation, Inc
African American Alliance of CDFI CEOs
Community Reinvestment Alliance of South Florida
Florida Housing Coalition
St. Petersburg Neighborhood Housing Services, Inc. dba Neighborhood Home Solutions
Georgia
Alliance 85
Georgia Advancing Communities Together, Inc.
Neighborhood Improvement Association
Southwest Georgia United Empowerment Zone, Inc.
Hawaii
Hawai‘i Alliance for Community-Based Economic Development
Illinois
Chicago Community Loan Fund
Housing Action Illinois
IFF
Universal Housing Solutions CDC
Woodstock Institute
Indiana
Continuum of Care Network Nwi, Inc.
Fair Housing Center of Central Indiana, Inc.
Gary Housing Authority
Homestead CS
Northwest Indiana Reinvestment Alliance
Prosperity Indiana
South Bend Heritage Foundation
Kentucky
Fahe
Louisiana
Family Resources of New Orleans
Jane Place Neighborhood Sustainability Initiative
Sun CHDO
Massachusetts
Massachusetts Affordable Housing Alliance
Springfield Neighborhood Housing Services
Maryland
Economic Action Maryland (formerly Maryland Consumer Rights Coalition)
Housing Options & Planning Enterprises, Inc.
Michigan
dba Development Incentives & Consulting
Fair Housing Center of Metropolitan Detroit
GenesisHOPE Community Development Corporation
Southwest Economic Solutions
Minnesota
Jewish Community Action
Black Women’s Wealth Alliance
Missouri
SLEHCRA
Mississippi
HEED
Increase One, Inc.
Nebraska
Family Housing Advisory Services
New Jersey
New Jersey Citizen Action
Seniors Success Center Corporation
New Mexico
Tierra Del Sol Housing Corporation
United South Broadway Corporation
New York
Association for Neighborhood and Housing Development (ANHD)
Devotion USA, Inc.
Empire Justice Center
Fair Finance Watch
Leviticus 25 23 Alternative Fund, Inc.
New York State Rural Housing Coalition, Inc.
PathStone Enterprise Center, Inc.
North Carolina
Henderson and Company
Piedmont Business Capital Inc.
Reinvestment Partners
Welfare Reform Liaison Project, Inc.
Ohio
County Corp.
The Pride Through Empowerment Foundation, Inc
Western Reserve Community Fund
Working In Neighborhoods
Oregon
CASA of Oregon
Housing Oregon
Oregon Human Development Corporation
Pennsylvania
Ceiba
Community First Fund
Pittsburgh Community Reinvestment Group
Urban Erie Community Development Corporation
Rhode Island
HousingWorks RI
Texas
City of DeSoto
Freedman’s Town
Johnson Consulting Group
Our Casas Resident Council, Inc.
South Dallas Fair Park Innercity Community Development Corporation
Southern Dallas Progress Community Development Corporation
Washington
African Community Housing and Development (ACHD)
LIHI
Wisconsin
Metropolitan Milwaukee Fair Housing Council
Newcap, Inc.
