Politico: Warren, Brown raise alarms about biggest bank merger since crisis

Politico, April 25, 2019: Warren, Brown raise alarms about biggest bank merger since crisis

The biggest proposed bank merger since the 2008 financial crisis is drawing flak from Sen. Elizabeth Warren and other key Democrats, who warn that it could create another institution so large that its failure would threaten the economy.

The potential deal between BB&T and SunTrust, which would create the nation’s sixth-largest retail bank, has also sparked fears about branch closings and whether the marriage will reduce consumers’ access to credit, concerns that were voiced on Thursday at a public hearing in Charlotte.

While it’s unlikely that Warren or other lawmakers like Rep. Maxine Waters could block the merger, the timing of the deal gives Democrats more 2020 campaign fodder against President Donald Trump, who has overseen a sweeping bank deregulation agenda despite the populist message of his 2016 campaign.

The Federal Reserve and FDIC will determine whether to approve the proposed deal, looking at a number of factors, including financial stability, effects on competition and community needs.

At the hearing hosted by the two agencies, the banks heard a slew of complaints from community groups about the potential impact of the merger, though there was also praise — particularly for BB&T — for prior community investments.

At the hearing, National Community Reinvestment Coalition CEO Jesse Van Tol argued that in the face of the reality where very large lenders continue to operate, a bank’s obligations to the communities it serves should increase the larger it gets. The public benefit it provides should be weighed against the prospect of reduced competition, he said.

“The problem with so-called ‘trust busting’ is that practically speaking, once a bank reaches a certain size many people consider it impractical, disruptive and perhaps politically unfeasible to break them up,” he said.

“We believe this type of analysis should be considered along the way, as banks grow, with a larger obligation the bigger they get,” he added.

NCRC will soon close negotiations on a community benefits agreement with the two banks, “detailing lending, investments and services for low and moderate income people and communities of color,” at which point, Van Tol said, his group could support the merger.

“It is your job, additionally, as the regulators, to ensure that the banks’ forward-looking statement creates a clearly significant public benefit,” he said.

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