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The Financial Brand: Will New Administration Rewrite the Rules on Banking Mergers?

The Financial Brand, May 2021, Will New Administration Rewrite the Rules on Banking Mergers?

When the previous DOJ Antitrust Division leadership asked for comments about bank merger guidelines, a group of members of Congress wrote that “As the financial industry changes, we call on the DOJ to protect our communities and strengthen its merger guidelines rather than bowing to industry pressure and rolling back protections.” The group included Jesus Garcia (D.-Ill.), a sponsor of the House version of Warren’s legislation and a vice-chair of the Congressional Progressive Caucus, and Alexandria Ocasio-Cortez (D.-N.Y.)

Regarding the influence of fintech on the supply of services, the National Community Reinvestment Coalition wrote, “…the digital financial providers may not have much of an impact in low- and moderate-income neighborhoods since customers unfamiliar with banking are less likely to engage in significant digital banking transactions.” On the small business side, the coalition noted that Federal Reserve research has found that small firms “tend to be less satisfied with fintech loan terms and conditions.”

The group also called for imposition of special requirements on very large mergers, such as those involving institutions over $10 billion. Specifically, merger applications would have to include “public benefit plans” affecting the merging institution’s entire geographical footprint. (It’s common in very large mergers for institutions to voluntarily make grants or other offers of aid to community groups in affected areas.)

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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