June 16, 2025
RE: Rescission of 2024 update to Business Combinations Under the Bank Merger Act; Docket ID OCC-2025-0001
To Whom it May Concern:
While the National Community Reinvestment Coalition (NCRC) and our undersigned member organizations and coalition partners appreciate the opportunity to comment on the rescission of the Office of the Comptroller of the Currency’s (OCC’s) 2024 update to its Business Combination Rule, we vigorously oppose this rescission and its immediate implementation without a comment period.
NCRC is a network of more than 700 community-based organizations dedicated to creating a nation that not only promises but delivers opportunities for all Americans to build wealth and attain a high quality of life. We work with community leaders and policymakers to advance solutions and build the will to solve America’s persistent racial and socio-economic wealth, income, and opportunity divides, and to make a Just Economy a national priority and a local reality.
Bank mergers represent a risk or an opportunity for our member organizations across the country. Our member organizations have established extensive working relationships with several OCC-regulated banks. When mergers occur, these relationships can be disrupted abruptly, particularly when decision-making regarding lending and investing becomes centralized and bank officers located in the home states of our member organizations are either replaced or re-assigned. Institutional changes such as these need to be assessed carefully by the OCC’s review of bank merger applications. Expedited proceedings are not adequate to thoroughly assess the impact of mergers on the banks’ future abilities to meet convenience and needs.
The rescission of the 2024 update to the OCC merger review regulation will increase the chances that merger reviews will not adequately assess the abilities of the banks to meet convenience and needs. Therefore, it is likely that lending, investment, and bank services in traditionally underserved communities will decline after mergers, contrary to the legal mandate that mergers confer public benefits in terms of increased access to bank products and services.[1]
The OCC claims that the 2024 regulatory updates introduced such high levels of confusion and uncertainty in the banking industry that they had to act immediately and rescind these updates. The OCC asserts that the 2024 rule potentially hampers “economically beneficial bank mergers.”[2] To avoid these adverse outcomes, the OCC states that it is utilizing its authority under the Administrative Procedure Act (APA) to issue the interim rule immediately rescinding the 2024 merger rule.[3] The OCC invites comments regarding a possible future rulemaking and a new policy statement to replace the 2024 policy statement.
NCRC’s position is that the 2024 merger rule and accompanying policy statement improved upon the previous regulation and substantially reduced uncertainty and confusion among banks. Instead of rescinding the rule, the OCC must reinstate it in any future rulemaking. Now, the OCC’s rescission plus the possibility of additional rulemaking that will be different than the 2024 rule introduces more uncertainty regarding requirements for merger applications. This back and forth with new rules and rescissions every time a new President emerges creates anxiety and angst among the industry and community stakeholders. The interim final rule is unnecessarily hasty. In contrast, the 2024 regulatory update was a well-constructed rule because its promulgation entailed thoughtful and deliberate policy making over several months with several opportunities for public comment in contrast to the jolting nature of this sudden rescission.
Contrary to the OCC’s assertion, the public interest is not served but is deterred by the immediate rescission of the 2024 rule. The OCC is thus abusing its authority under the APA to forgo public comment periods on a rule change.[4]
This comment letter demonstrates:
- The previous regulation suggested that the majority of banks would be eligible for expedited merger reviews under four scenarios since most banks are well-capitalized and pass their CRA and other compliance exams. Returning to the previous regulation would result in several merger approvals that do not abide by the legal mandate that communities benefit from mergers.
- The general principles for considering mergers in an expedited or longer time period were clearer in the 2024 update than in the previous regulation.
- The CRA and convenience and needs requirements for obtaining merger approvals for banks were clearer in the 2024 update and more likely to realize benefits for communities in terms of more loans, investments, and bank services.
- The 2024 update provided necessary detail and clarity regarding when public comment periods would be extended and when the OCC would hold public hearings or meetings.
- The repeal of the 2024 regulatory update without even a comment period introduces more confusion and uncertainty among stakeholders and is not conducive for efficient business operations for banks or the realization of community benefits.
- Any new policy statement that the OCC suggests it might develop must reinstate the 2024 OCC statement and insist that the resulting bank from a merger must have a better ability to meet convenience and needs. It must also indicate that Community Benefit Agreements (CBAs) are an important way to meet the public benefits requirements in bank merger law and that the OCC’s ongoing supervision and examinations would monitor post-merger compliance with any bank commitments related to the convenience and needs factor.
Expedited Process in Previous Regulation does not Uphold Community Benefits Requirement
Prior to the 2024 rule, the OCC’s regulation stipulated that several banks were eligible for expedited reviews under one of four scenarios that resulted in approval fifteen days after the end of the public comment period because they had passing CRA ratings and were well capitalized.[5] However, the expedited merger process does not allow for sufficient time to assess how the mergers would impact the banks’ compliance with CRA, fair lending, and other consumer protection laws.
Even if the merging banks have passing marks on their exams, mergers are complicated events that can upend compliance systems because of personnel changes, technological integration processes, and alterations in the extent of centralized or decentralized decision-making. The OCC and the general public need sufficient time to evaluate these significant changes. Community stakeholders will often ask for public meetings and hearings because they and the OCC need to hear how the banks will respond to these complicated compliance issues. Written comments submitted during the comment period and the banks’ responses to these comments are often not sufficient to uncover the nuances regarding these compliance issues since banks often provide defensive written responses that do not elucidate upon these issues as well as public testimony and agency and community questions during hearings.
The 2024 rule was correct in removing the expedited procedure from the regulation since the type and length of OCC deliberation should be decided on a case-by-case basis given the likelihood of the complexities of compliance issues differing among mergers. Moreover, the OCC and community stakeholders need sufficient time to address inconsistencies in the banks’ CRA, fair lending, and consumer protection compliance. Even banks that pass their exams will not be uniform in their performance with weaknesses occurring in either specific geographical areas or product lines. The OCC and community organizations need sufficient time to further probe any weaknesses and ask the banks how they will address performance inconsistencies.
If agencies do not engage in careful deliberation of merger applications over an adequate time period, low- and moderate-income (LMI) communities and communities of color are likely to experience significant declines in lending, less access to bank branches and services, and higher interest rates and prices for bank services. A paper just released in March of 2025 concludes that mergers of large banks make them less resilient and more suspect to declining performance and loan defaults.[6] Other analyses have found that large bank holding companies decrease small business lending after mergers and that banks generally lend less in LMI tracts after mergers.[7] In addition, branch closures after mergers would have negative implications for small business lending. NCRC has found that banks with branches in counties are responsible for two thirds of all small business lending in those counties.[8] Finally, large banks can engage in price gouging and other monopolistic practices in communities, particularly those with less post-merger competition.[9]
Only when mergers are accompanied by increased agency oversight and/or engagement by the public are the chances increased that mergers would confer public benefits on communities as required by law.[10] Research conducted by Federal Reserve economists demonstrated that Community Benefit Agreements (CBAs) negotiated with community groups resulted in banks increasing their lending to traditionally underserved communities after mergers.[11] More recent research has reached similar conclusions.[12] These positive outcomes are never assured but they are more likely to be attained when agencies undergo careful analysis of applications and establish clear standards and expectations for better service to communities.
Given that the realization of benefits and avoidance of community harms often hinge on the thoroughness of merger reviews, the OCC must not revert back to the previous regulation, which established a presumption of approval on a few weeks’ notice. This is not the proper way to ensure the legal obligation that mergers benefit the public is realized. The burden of proof should be on the banks to demonstrate to the satisfaction of the OCC and the public that public benefits will be realized. The burden must not be on under-resourced community stakeholders to remove an application from an expedited timeline by demonstrating that a merger would not benefit the public.
General Principles for Merger Reviews in 2024 Update Clearer than Previous Regulation
The 2024 regulatory update and policy statement introduced general principles for timely approval of mergers that were clearer than the previous regulations granting expedited approvals for mergers.
In the 2024 rule, the OCC stated that the agency would likely approve mergers in a timely manner if the banks involved passed their CRA exams, management and safety and soundness exams, and reviews checking compliance with consumer and fair lending laws. Additionally, the agency would likely approve the merger if it did not receive adverse comments identifying significant CRA or consumer compliance concerns.[13] Mergers that were likely to receive more review over a longer time period were those involving banks with over $50 billion in assets, banks with failing ratings on CRA and other compliance exams, and banks that have not undertaken corrective actions in response to formal enforcement actions.[14]
Prior to the 2024 rule, the OCC’s regulation stipulated that banks were eligible for expedited reviews under four scenarios that entailed approval fifteen days after the end of the public comment period if they had passing CRA ratings and were well capitalized. The scenarios for expedited approval include those in which the acquiring bank was eligible for expedited review but the target bank was not eligible for expedited review, but the target bank did not exceed 10 percent of the assets of the acquiring bank. Still another scenario involves the acquiring bank being eligible, the same 10 percent asset threshold, and pre-filing communications in which the banks request permission from the OCC to use the streamlined application form.[15]
The various scenarios instead of one set of conditions for all banks described in the 2024 update are more confusing for all stakeholders. While the 2024 update did not include an expedited review, it had a clear list of factors generally associated with faster approvals. In addition, pre-filing approval to use streamlined procedures introduces the possibilities of the OCC’s staff improperly coaching the applicants to obtain favorable decisions on their applications.
Convenience and Needs Criteria Clearer and More Likely to Result in Public Benefits in 2024 Rule
Unlike the previous rule, the 2024 rule provided eight factors in a checklist format that would help banks prepare their applications for satisfying the convenience and needs criterion in the merger application process. If a bank methodically prepared their applications by considering each of these eight factors, their chances of approval would increase. Moreover, public benefits required by banking law would be more likely to be realized in the wake of a merger.
These eight factors included:[16]
- Plans to open or close branches overall and in low- and moderate-income communities
- The availability and cost of bank services and products
- Plans to improve or reduce credit availability including home, consumer, small farm, and small business lending
- Job losses or reduced job opportunities from branch closures
- Community development investments or initiatives
- Efforts to support affordable housing or small business initiatives
- Consideration of public comments received regarding the merger application
- Consideration of CRA performance as well as a forward-looking analysis of the application’s impact on convenience and needs as a result of the merger
These factors clarify agency expectations for securing approval of merger applications. The merging banks would need to increase or at least maintain their lending, investment, and banking services. They would need to have sufficient CRA performance but also indicate clearly in their application how they would continue to serve convenience and needs of communities. They would unlikely receive OCC approval if they significantly decreased their product offerings and closed significant numbers of their branches.
The policy statement in Appendix A of the 2024 regulation did not suggest that the agency would be inflexible since it indicates that approval of mergers would include these factors but could also include other considerations.[17] For example, if the bank was changing its business model and was reducing some of its activities listed in the factors, the regulation allowed for this evolution by indicating that these factors were not exhaustive. That would allow the banks to offer other concrete benefits arising from their mergers by increasing other reinvestment activities.
Overall, this list is clear in its expectations for the merging banks and provides a checklist for members of the public to review and comment upon the merger application. By providing clarity and suggesting that post-merger performance in meeting convenience and needs should be enhanced, the 2024 merger update represented a win-win for banks and communities by making increases in lending and reinvestment activity more likely after mergers.
Sections in 2024 Regulation about Public Comment Period and Meetings are Necessary and not Superfluous
The OCC also stated that it believes that the sections in the Policy Statement in the 2024 regulatory update concerning public comment periods and meetings were duplicative of existing regulations in 12 CFR Sections 5.10 and 5.11. Although both documents discuss the rationale and procedures for holding public comment periods and meetings, the Policy Statement provides more detail and clarity regarding when comment periods are extended and when the OCC holds meetings. For example, the OCC will extend the comment period if it believes that the applying banks need to furnish more material so that the public can assess the benefits and costs of mergers.
The Policy Statement also indicated that the OCC would hold meetings if mergers were significant either for the banking industry and/or communities. It suggested that mergers with assets above $50 billion would often pose significant issues since anti-trust issues are more likely to arise in mergers involving the largest banks.[18] Also, mergers of the largest banks are likely to have wide-ranging impacts on convenience and needs since the resulting institution would serve several states, metropolitan areas, and rural counties.
It appears that the real reason for the OCC’s new opposition to its recently promulgated Policy Statement was not duplication since the Statement had new material and neither the descriptions in the previous regulation nor the Policy Statement were lengthy. Instead, a more laissez faire outlook of the new Administration is more likely prompting the OCC to discard the descriptions of the public comment period and meetings of the 2024 regulatory update. Yet, the public comment and meetings section of the Policy Statement of 2024 was crisp and concise in identifying the essentials for ensuring the realization of the legal requirement that mergers confer public benefits. Any further paring back threatens to renege on the OCC’s obligation to ensure that mergers confer public benefits.
Any Updated Policy Statement Must Reinstate the 2024 Statement and Address Community Benefit Agreements
In response to the OCC’s indication that it may create a new policy statement on mergers, NCRC urges the agency to restore the 2024 Policy Statement and to adopt provisions from the FDIC’s September 2024 Policy Statement concerning expectations, CBAs, and follow-through on commitments. The FDIC’s statement indicated that merger transactions should enable the resulting bank “to better meet the convenience and the needs of the community to be served than would occur absent the merger in order to find favorably on this factor.”[19] This clear expectation requires the resulting bank to exceed the overall performance of the two banks prior to their merger on the eight factors in the OCC 2024 update to its merger regulation discussed above. Exceeding prior performance on the convenience and needs factor would ensure the legally required community benefits arising from the merger.
Any future OCC policy statement should also indicate that CBAs or other plans developed in consultation with community organizations are an important method for demonstrating public benefits. Furthermore, compliance with any commitments would be checked by the OCC in its ongoing supervisory examinations. The OCC could adopt wording similar to the FDIC’s:
As appropriate, claims and commitments made to the FDIC to support the evaluation of the expected benefits of the merger may be included in the Order, and through ongoing supervisory efforts, the FDIC will evaluate the Insured Depositor Institution’s (IDI’s) adherence with any such claims and commitments.[20]
Conclusion
The 2024 regulatory update and Policy Statement represented a well-crafted regulation and policy guiding merger decisions that increased the chances that the public would benefit in terms of increased access to lending and banking services offered in a competitive environment. The OCC was part of interagency discussions involving updating merger procedures and regulations over a multi-year time period affording stakeholders multiple opportunities to offer their thoughts and insights.
Now, the OCC is summarily revoking the 2024 regulatory update without even an opportunity for the public to offer their comments. The use of the exemption to public comments in the APA is not justified in this case. The back and forth in merger regulation and policies depending on the political environment increases the chances of arbitrary and capricious rulemaking that fails to protect communities. We urge the OCC to restore the 2024 regulatory update and dispense with this hasty process that increases confusion and uncertainty, which does not promote banking as a business that meets convenience and needs of communities.
We thank you for this opportunity to comment on this important matter. If you have any questions, please contact me at jvantol@ncrc.org or Josh Silver, Senior Fellow, at jsilver97@gmail.com.
Sincerely,
Jesse Van Tol
President and CEO
Sign On Organizations
African American Alliance of CDFI CEOs
ANHD
ASIAN, Inc.
Carnegie Mellon University
CASA of Oregon
CDFI Friendly South Bend
Chicago Community Loan Fund
Coastal Enterprises, Inc.
Cypress Hills Local Development Corporation
Dorchester Bay Economic Development Corporation
Economic Action Maryland Fund
Fair Finance Watch
Fifth Avenue Committee
Global Lighthouse Solutions
Harlingen Community Development Corporation
Henderson & Company
Housing Action Illinois
Housing Education And Economic Development
Housing Opportunities Made Equal of Greater Cincinnati
ICON CDC
Metro Milwaukee Fair Housing Council
Movin’ Out, Inc.
Neighborhood Housing Services of Greater Berks, INC
New Jersey Citizen Action
New Jersey Community Capital
Pittsburgh Community Reinvestment Group (PCRG)
Prosperity Indiana
R.A.A. – Ready, Aim, Advocate
Rise Economy
Somerville Community Corporation
South Bend Heritage
St. Louis Equal Housing Community Reinvestment Coalition
Texas Association of Community Development Corporations
The Enterprise Center at PathStone
The Greenlining Institute
The Housing Council at PathStone
The Sherman Park Community Association, Inc.
Tolson Center, Inc
United South Broadway Corporation
Urban Economic Development Association of Wisconsin (UEDA)
Urban Land Conservancy
Utah Housing Coalition
Vermont-Slauson LDC, Inc.
Washington Homeownership Resource Center
Woodstock Institute
[1] For the public benefit requirement, see FDIC webpage section regarding the Federal Deposit Insurance Act, specifically Section 18(c)(5)(B) via https://www.fdic.gov/regulations/laws/rules/1000-2000.html
[2] Office of the Comptroller of the Currency (OCC), Business Combinations Under the Bank Merger Act; Rescission, Federal Register, Vol. 90, No. 93, May 15, 2025, p. 20563
[3] OCC, Recission, op. cit, p. 20563
[4] Ibid.
[5] OCC, Recission, 2025, p. 20562
[6]Jeffrey Jou, Teng Wang, Jeffery Y. Zhang, Bank Lending Fragility After Mergers, U of Michigan Law & Econ Research Paper No. 24-039, March 10, 2025, 4, the authors find “mergers involving large banks with combined assets of $50 billion or more are expected to book an additional $600 million in loan losses per quarter during a severe economic downturn, whereas smaller mergers under $1 billion barely move the needle on fragility,” https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5121787
[7] Josh Silver, Archana Pradhan, and Spencer Cowan, Access to Capital and Credit in Appalachia and the Impact of the Financial Crisis and Recession on Commercial Lending and Finance in the Region, report prepared for the Appalachian Regional Commission, July 2013, 221-222, https://www.arc.gov/wp-content/uploads/2020/06/AccessToCapitalAndCreditInAppalachia-July2013.pdf
[8] Bruce C. Mitchell, Jason Richardson, Zo Amani, Relationships Matter: Small Business and Branch Bank Locations, March 2021, https://ncrc.org/relationships-matter-small-business-and-bank-branch-locations/
[9] Ariel Pakes, Michael D. Whinston, and Fanyin Zheng, The Consumer Welfare Effects of Bank Mergers, Toulouse School of Economics, October 2024, https://www.tse-fr.eu/sites/default/files/TSE/documents/sem2024/department/whinston.pdf “We find
that consumer welfare fell significantly, economically and statistically, in single-merger counties compared to
no-merger counties, with the difference equivalent to a 35% reduction in deposit interest rates.”
[10] FDIC webpage section regarding the Federal Deposit Insurance Act, specifically Section 18(c)(5)(B) via https://www.fdic.gov/regulations/laws/rules/1000-2000.html
[11] Raphael W. Bostic and Breck L. Robinson, What Makes CRA Agreements Work? A Study of Lender Responses to CRA Agreements, 14. Paper prepared for the Federal Reserve System’s third biennial research conference titled
“Sustainable Community Development: What Works, What Doesn’t and Why,” February 2003. https://www.federalreserve.gov/communityaffairs/national/CA_Conf_SusCommDev/pdf/bosticraphael.pdf, Raphael W. Bostic and Breck L. Robinson, “Do CRA Agreements Influence Lending Patterns?” Real Estate Economics, released ahead of print, August 2002, 10-11.
[12] Colleen Casey, Joseph Farhat, Gregory Cartwright, Community Reinvestment Act and Local Governance Contexts: Advancing the Future of Community Reinvestment? Cityscape: A Journal of Policy Development and Research, Volume 19 Number 2 (Washington, D.C: U.S. Department of Housing and Urban Development, Office of Policy Development and Research 2017), 146, https://www.jstor.org/stable/26328333
[13] OCC, Final Rule, Business Combinations Under the Bank Merger Act, Federal Register, Vol. 89, No. 186, September 25, 2024, p. 78218
[14] OCC Final Rule, 2024, p. 78218
[15] OCC Recission, 2025, p. 20562
[16] OCC Final Rule, 2024, p.78220
[17] The language in the 2024 final rule includes, “Review of the convenience and needs factor is prospective and considers the likely impact on the community of the resulting institution after the transaction is consummated, including but not limited to…” Note the phrasing “including, but not limited to.” See page 78220.
[18] OCC, Final Rule, 2024, p. 78220
[19] Federal Deposit Insurance Corporation (FDIC), Final Statement of Policy on Bank Merger Transactions, Federal Register , Vol. 89, No. 188, Friday, September 27, 2024, p. 79138
[20] Ibid.
