The top Democrat on the House Financial Services Committee is urging two federal agencies to closely scrutinize a proposed $66 billion merger between BB&T and SunTrust and postpone any final decision until the panel investigates it, the latest in a long-running crusade against bank mergers and Wall Street.
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The combination of the two firms – which would create the sixth-largest U.S. bank by assets and deposits – would make it more difficult for community banks to operate, leading to branch closures that predominately effect black farmers and rural communities, among others, according to Rep. Maxine Waters, D-Calif.
To date, the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) have held two public hearings on the deal in Charlotte and Atlanta, but Waters says more is needed.
“The proposed merger is simply not between two small banks located in Georgia and North Carolina, but rather between two of our largest banks with a presence in numerous states and produce and services being offered across the country,” the California Democrat wrote in a letter to Fed Chairman Jerome Powell and FDIC Chairman Jelena McWilliams.
Waters asked the agencies to "defer any final decisions on the merger application" until after the financial services panel reviews the proposed merger.
Waters has long railed against mergers between financial institutions as scrutiny over the transactions appears to have become less stringent. Between 2006 and 2017, the Federal Reserve denied none of the 3,800 merger applications submitted to the agency for review.
Sen. Elizabeth Warren, a Democrat representing Massachusetts who is running for the party’s nomination for president in 2020, also opposes the transaction, previously telling Powell that the agency’s "record of summarily approving mergers raises doubts about whether it will serve as a meaningful check on this consolidation.”
Waters attributed the impetus for the deal to a law passed last year with support from both parties that eased federal rules on smaller, community banks, but did not address regulations on the so-called “too big to fail” institutions.
Alongside mergers, Waters also regularly speaks out on the potential negative effect of raising some regulatory burdens on both large financial institutions and community banks.
Last year, for example, she took to the House floor to rail against a bill that would allow the Federal Reserve to make unilateral changes to the Volcker Rule, which blocks banks from using customer deposits for risky investments.
“It sends a shining beacon to hedge funds all over the country that they can peddle risky and questionable investments to community banks and the regulators will be none the wiser,” Waters said at the time. “If the hedge funds can prey on community banks with little oversight then they will be unable to provide the kinds of investments in housing, and small businesses that communities need.”