[Congressional Record Volume 171, Number 85 (Tuesday, May 20, 2025)]
[House]
[Pages H2168-H2175]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1415
PROVIDING FOR CONGRESSIONAL DISAPPROVAL OF THE RULE SUBMITTED BY THE
OFFICE OF THE COMPTROLLER OF THE CURRENCY OF THE DEPARTMENT OF THE
TREASURY RELATING TO THE REVIEW OF APPLICATIONS UNDER THE BANK MERGER
ACT
Mr. BARR. Mr. Speaker, pursuant to House Resolution 426, I call up
the joint resolution (S.J. Res. 13) providing for congressional
disapproval under chapter 8 of title 5, United States Code, of the rule
submitted by the Office of the Comptroller of the Currency of the
Department of the Treasury relating to the review of applications under
the Bank Merger Act, and ask for its immediate consideration in the
House.
The Clerk read the title of the joint resolution.
The SPEAKER pro tempore. Pursuant to House Resolution 426, the joint
resolution is considered read.
The text of the joint resolution is as follows:
S.J. Res. 13
Resolved by the Senate and House of Representatives of the
United States of America in Congress assembled, That Congress
disapproves the rule submitted by the Office of
[[Page H2169]]
the Comptroller of the Currency of the Department of the
Treasury relating to ``Business Combinations Under the Bank
Merger Act'' (89 Fed. Reg. 78207 (September 25, 2024)), and
such rule shall have no force or effect.
The SPEAKER pro tempore. The joint resolution shall be debatable for
1 hour equally divided and controlled by the chair and ranking minority
member of the Committee on Financial Services or their respective
designees.
The gentleman from Kentucky (Mr. Barr) and the gentlewoman from
California (Ms. Waters) each will control 30 minutes.
The Chair recognizes the gentleman from Kentucky.
General Leave
Mr. BARR. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days in which to revise and extend their remarks and
include extraneous material on the resolution under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Kentucky?
There was no objection.
Mr. BARR. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in support of this joint resolution of
disapproval that would nullify the Office of the Comptroller of the
Currency's final rule that makes it more difficult for banks to merge
and merge in a healthy way. That is why I introduced the House
companion, H.J. Res. 92.
Today, we have the opportunity to prevent future administrations from
issuing arbitrary rules on mergers and acquisitions that lack robust
cost-benefit analysis and would make it significantly harder for
financial institutions to grow and compete.
Banks in the great Commonwealth of Kentucky and throughout the
country are facing challenges in managing the high costs of complex
regulations. Furthermore, customers now demand advanced technological
features, such as mobile and online banking, which require substantial
capital investments.
Mergers often present the only viable path for these institutions to
keep up with these regulatory and technological costs and continue
serving their local communities.
They also play a vital role in ensuring the safety and soundness of
the financial system. By enabling stronger, well-managed institutions
to acquire weaker ones, especially those struggling due to local
economic conditions, we can prevent bank failures and the panic that
they cause.
Instead of making it harder for banks to merge, we should be
eliminating outside obstacles to mergers, enhancing competition and
innovation, and ensuring that Americans, especially those in rural and
underserved communities, retain access to physical branches with
employees who understand their local economies.
That is why I introduced H.R. 1900, the Bank Failure Prevention Act,
which includes a shot clock to ensure timely decisions on merger
applications.
Mr. Speaker, I come from Kentucky. It is a basketball-crazed
Commonwealth, and we care about the shot clock. Congress should care
about the shot clock on merger applications, as well.
My bill would restore fairness and predictability, preventing delays
and giving banks the stability they need to focus on serving their
customers and growing their businesses.
The Bank Failure Prevention Act will help community banks and
regional banks thrive in today's competitive environment, providing for
a shot clock on the review of those merger applications and providing
better outcomes for consumers.
I look forward to marking up this important legislation in the House
Financial Services Committee this week.
The OCC's merger rule under the Biden administration would have taken
us in the exact opposite direction. It would have upended decades of
precedent by shifting the burden onto banks to prove their merger
should be approved rather than requiring the OCC to demonstrate how the
merger conflicts with statutory factors.
This would be fundamentally unfair, increasing confusion for banks
seeking to merge and massively increasing the delay on the pendency and
review of these applications without any kind of deadline on the
review.
Additionally, the rule would have abandoned expedited review for
mergers for small, well-capitalized banks. Before the Biden-era
regulation, there was an opportunity for expedited review of healthy
mergers when there were small and well-capitalized institutions
involved. Unfortunately, because of the Biden regulation, this resulted
in a much more protracted process.
Expedited reviews are essential to avoid prolonged, costly merger
review processes that hinder banks from maintaining their employee base
or investing in technology. Instead, long-drawn-out application
processes create an environment of uncertainty due to regulatory
delays, even when the proposed transaction is relatively simple.
At the end of the day, Mr. Speaker, consumers are the ones who are
hurt most when their banks are caught in limbo and forced to devote
resources to navigate the merger process instead of enhancing their own
products and services.
The Democratic-led OCC rule was driven more by a progressive ideology
against mergers in all sectors of all kinds in the economy rather than
sound, rational policymaking. In fact, the Biden-Harris OCC did not
even coordinate with the other banking regulators, such as the Federal
Reserve Board, before issuing this final rule.
Creating different merger rules for banks with different charters
would add significant ambiguity for both banks and their customers.
Thankfully, the current OCC under President Trump has recently
indicated they will abandon this flawed rule. However, without this
Congressional Review Act resolution, there is nothing to prevent a
future administration from reintroducing this damaging rule that would
prevent healthy, beneficial mergers from occurring. Community and
regional banks, as well as their customers, should not have to fear
that the rules will change dramatically in a few years.
Mr. Speaker, I can already anticipate the argument from my good
friend from California. I know what she is going to say here in just a
few minutes. She is going to say: Look at the Republicans. They are
supporting mergers of big, bad banks, and that hurts Americans.
To the contrary, Mr. Speaker. Allowing healthy mergers to prevent
bank failures allows for healthy financial institutions to compete with
the big Wall Street banks. If you want more competition for big Wall
Street banks, you should support this resolution of disapproval because
you are going to create stronger competitors to the big Wall Street
banks.
Opposing this resolution, like the gentlewoman and ranking member of
our committee is about ready to do, is defending the regulatory moat
that protects big banks from real competition.
The Democrats' opposition here is defending big banks without
competition, and that is why I urge all of my colleagues on both sides
of the aisle to support healthy competition to prevent bank failures
and to disapprove of this unwise regulation from the Biden
administration.
Mr. Speaker, I urge all of my colleagues to support this resolution
and prevent the regulatory whipsaw that has proven so detrimental for
banking institutions and the American people who rely on them. I
reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I am so pleased that the gentleman from Kentucky (Mr.
Barr) referred to me because the big banks hate me. They love him. They
support him. They don't support me. Let's see whose side he is on.
As a matter of fact, he is here talking about not being in support of
big bank mergers because he is trying so hard to get more community
banks. We need more community banks, but he is a long way from getting
what he is talking about.
The fact is, we really do need them because of the big bank mergers.
One of the things he could do to increase having community banks that
relate to the neighborhoods and relate to the people in the communities
is to stop allowing these big mergers to take place.
I rise to express my opposition to S.J. Res. 13, a Congressional
Review Act resolution that would rescind a rule the Office of the
Comptroller of the Currency has put forth to improve their bank merger
application review procedures.
[[Page H2170]]
Consumer groups, experts, and I have long rung the alarm bell as the
Federal Government rubberstamped bank mergers for decades to the
detriment of competition. The result has been a growing number of
banking deserts where communities lack even one bank branch.
Let's see what happens after a merger.
Mr. Speaker, I want the gentleman to listen to me. I want him to know
what happens after the big bank mergers. They close branches. They
close down branches all throughout the communities. They lay off the
workers. They need less workers, and so they start laying them off.
They raise interest rates and fees on their customers.
We lose relationship banking, community involvement, and a personal
touch from your neighborhood bank. When these big bank mergers come in,
you don't have tellers anymore. As a matter of fact, when they close
down the branches, you try to get them on the telephone.
Have you tried to talk with a bank manager on the telephone with
these menus that they have? They run you around from so-called
extension to extension to extension. You lose all of these
relationships.
In fact, while thousands of bank mergers were approved in the last
few decades, the last bank merger application that regulators denied
was denied in 2003, 22 years ago.
Meanwhile, community banks have disappeared as the number of banks
declined from more than 18,000 in 1990 to fewer than 5,000 today.
Meanwhile, the biggest banks have grown much bigger through mergers
and, not surprisingly, are charging customers more for banking products
and services.
For example, the Consumer Financial Protection Bureau found that the
largest banks charged between $400 and $500 every year in additional
interest and other fees for their average credit cardholders, compared
to smaller community banks and credit unions.
In fact, that negative consumer impact is one of the many reasons I
and more than 90 percent of public commenters urged regulators to
oppose a recent Capital One and Discover merger--I think the gentleman
supported that--which created the largest credit card issuer.
The Trump administration approved it anyway, and I know the gentleman
from Kentucky (Mr. Barr) did what Trump wanted him to do.
We already have enough megabanks with too much corporate power. In
the mid-1990s, the 20 largest banks held 15 percent of all bank assets.
Today, they hold more than 65 percent of all bank assets. The four
largest megabanks hold more assets than the next 75 largest banks
combined.
These megabanks are too big to manage. Take Wells Fargo, for example.
They grew larger through mergers and then repeatedly violated the law
and harmed millions of consumers. It got so bad that the Fed, under
former Chair Janet Yellen's leadership, imposed an asset cap that
remains in place to this day.
That is not easily done. Mr. Speaker, you don't hear Treasury doing
that, placing asset caps, but they did that because of the way that
Wells Fargo bank had just mismanaged and disregarded its customers.
To curb these rubberstamped mergers, former President Biden issued an
executive order to encourage the Department of Justice and the banking
agencies, including the OCC, to strengthen their merger reviews--get
more information and find out what they intended to do and how they
were going to provide more services.
That is what President Biden tried to get done with the OCC, to get
more information. Don't just rubberstamp them. Let them merge, and do
all the things that I have just alluded to.
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After going through a public notice and comment process, the OCC,
which oversees most large banks, including the four largest commercial
banks in the country, published a final rule last year that made
several commonsense improvements to its merger review procedures.
First, it eliminated a fast-track procedure where even the largest
bank mergers could receive automatic approval of their mergers 15 days
after their public notice comment period closed.
Second, the OCC required merger applicants to file the standard
merger application to ensure they had enough information to weed out
harmful mergers.
Third, the rule provided guidance, something industry often asks for.
Specifically, the OCC provided guidance on how they would consider
statutory factors when reviewing an application, making the process
more transparent.
Rolling back these reforms is dangerous, especially at a time when
DOGE is firing staff at the OCC and the other bank agencies, making it
harder for them to carefully review these mergers.
I guess Elon Musk didn't stop with all of the other agencies that
they were undermining and firing and laying off. They decided that they
would fire staff at the OCC and the other bank agencies, making it
harder for them to carefully review these mergers.
What Elon Musk was doing is consistent with what he has been doing
and I guess what Trump wants him to do. They want less services. They
want to make sure that they are supporting the biggest banks with these
mergers, the biggest banks that are going to close down the community
relationships that we have with community banks.
Moreover, I do not know why Republicans rushed this bad resolution to
the floor, bypassing a committee markup. That would have been prudent.
As I would point out, this resolution is actually a giant waste of
time, as it would rescind a rule that was already rescinded by the OCC.
You heard me right. President Trump's Acting Comptroller of the
Currency rescinded this very rule last week when it issued an interim
final rule that took effect on May 15.
I am not surprised that my Republican colleagues weren't paying
attention to this development, or maybe they were. Maybe they think
that it was something that Trump had said to Elon Musk: Go get it done,
an executive order. Maybe they felt that this was one of those
executive orders that would get ruled out by the courts when we
absolutely oppose him.
This resolution is only moving because Republicans needed to waste
time while they hammer out how best to give $5 trillion in tax breaks
to billionaires. They needed more time to figure out if tens of
millions of Americans would lose Medicaid, whether millions of children
would lose access to food stamps, and just how many consumer watchdogs
they would fire at the Consumer Financial Protection Bureau. It doesn't
matter that the United States bond ratings were downgraded, that
foreign investors are dumping U.S. investments, or that small
businesses are struggling to keep their lights on.
No, Republicans are instead rescinding a rule that Trump already
rescinded. I tried to give them credit for why he might be doing this,
but what they have done is they have just disregarded that it has
already been done. They came over to waste some time, just to make sure
that that executive order perhaps won't work.
Much later tonight, when the rest of America is sleeping, Republicans
are going to figure out just how many Americans they can squeeze to pay
off their billionaire overlords.
Mr. Speaker, this is a bad resolution being considered under the
worst circumstances. I don't know why we are wasting time on this
floor. I urge Members to reject this wasteful, harmful, anticompetition
resolution.
Mr. Speaker, I reserve the balance of my time.
Mr. BARR. Mr. Speaker, I yield myself such time as I may consume.
Before I yield some time to my good friend from Florida, I will take
the opportunity to respond to a few of the points that my friend from
California made that maybe she is misunderstanding what the law
actually says.
When I refer to the law, I am referring to the Congressional Review
Act, which is the statute that we are invoking here to invalidate this
Biden-era regulation.
The gentlewoman from California says that: This is a waste of time.
The Trump OCC has rescinded the rule. We don't need to do this. I would
remind the gentlewoman from California the reason why we need to do
this. The reason why we are invoking the provisions
[[Page H2171]]
of the Congressional Review Act is that passing a resolution of
disapproval under this law ensures that a substantially similar bad
rule can never be reintroduced in the future without scrutiny.
We obviously know that there are bad regulators from the prior
administration that prevented healthy mergers that would have prevented
bank failures. There is no guarantee that we are not going to have an
equally bad regulator in the future. That is why we have to take out
this insurance policy against bad regulators in the future.
That is what the CRA is. It sends a clear message about balanced
regulations that foster competition and innovation without excessive
bureaucracy, and it safeguards against unchecked regulatory actions,
ensuring that future rules undergo careful oversight.
Now I will address this assertion that bank merger applications are
just rubber-stamped by regulators. If there is any evidence that that
is not true, it is proof from the prior administration. Not only was
there not a rubberstamp, there was so much scrutiny that they never
happened. They languished. There was no shot clock. There was no
review. They just sat there and languished.
Do you know what happened as a result? Banks withered on the vine
waiting for a decision because of regulatory paralysis from the
previous administration. There was hardly a rubberstamp. There was
never a decision.
Frankly, all we are asking for is a decision one way or another, Mr.
Speaker, yes or no, green light, red light. Don't just sit there in
purgatory forever and not make a doggone decision. That is the problem
we are trying to fix.
With respect to the gentlewoman's concern about closed branches, we
are concerned about the lack of branches. We are concerned about
banking deserts. That is exactly why Republicans introduced a
resolution to allow for more de novo charters. We want more banks, not
less. We want more competition, not less. We want those new banks to
form in those underserved communities, urban, rural, suburban, wherever
they are. We need more.
Mr. Speaker, my question to the gentlewoman, the ranking member, is:
Why did she vote against that? If she is so concerned about no
branches, not enough branches, banking deserts, why is she voting
against making it easier for new banks to form in those places where
there are no financial services?
Mr. Speaker, I yield 2 minutes to the gentleman from Florida (Mr.
Haridopolos), who is a great leader on our committee and who will offer
his wisdom on this subject.
Mr. HARIDOPOLOS. Mr. Speaker, I stand in support of Congressman
Barr's good legislation.
Let me remind those listening about this idea that the tax issue is
so important. Let's be clear here. The current rate on the highest
earners in the United States is 37 percent. If our resolution passes,
it will stay at 37 percent. There is no big tax break for the rich, as
they claim over and over. It is 37/37. Let's be very clear on that
message.
Second, who is getting the big tax cuts in this resolution? It is
seniors, Social Security, people who earn tips, and people who work
overtime. Those are the hardworking Americans who have supported the
President and want to push this resolution forward so that we all enjoy
economic success.
Getting to this issue today, I think it is so important, and
Congressman Barr has put it perfectly. This is consumer protection.
This is fair competition because the prior administration's OCC rule
burdened businesses with excessive red tape, particularly targeting
small banks and limited beneficial mergers.
Reversing this rule allows for essential mergers that drive
innovation, lower operational costs, and benefit consumers. Remember,
this rule was issued without coordinating with any other Federal
agency.
This is why the smart decision Republicans are making today will
codify and make a strong decision because we finally have true
competition against the big boys that people say they are fighting
against.
This is a commonsense issue, and I am proud to support Congressman
Barr on this as a Member of the Financial Services Committee.
Ms. WATERS. Mr. Speaker, I reserve the balance of my time.
Mr. BARR. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, as to our Democratic colleagues' concern that this
legislation and allowing for healthy mergers to happen in the banking
sector would somehow diminish financial services or that customer
service would somehow be lost, it is actually the opposite.
When you have healthy mergers among, especially, community banks or a
small regional bank acquiring a community bank, that allows them to add
scale. That allows them to invest in the very technology that provides
the customers with better services, with better, more innovative
financial services and products.
Far from losing customer service, this is a way for smaller
institutions, regional banks, to come together into combinations,
invest in more technology, to lower costs, to help those customers to
increase access to financial services in ways that they can better
compete with the megabanks.
Mr. Speaker, I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
When I talk about rubber-stamping, oftentimes people don't really
know what we are talking about. What I am saying is that we need to
have better review. The OCC needs to be able to do everything possible
to ensure that they know what these big banks are going to do and
whether or not they are going to close down branches, whether or not
they are going to lay off people, whether or not people are only going
to be able to go to their telephone, to the internet, and somehow try
to get someone to talk to.
Let me tell you what the definition of rubber-stamping is. In 2023,
the OCC approved--you won't believe this--22 of 23 mergers within 60
days. That is 95 percent done in 2 months. Now, that is what you call
rubber-stamping. That is what you call the big businesses, big banks
being able to do whatever they want to do. All they have to do is get
individuals like my friend on the opposite side of the aisle to stand
up and support them with what they want to do.
Again, I will remind you that when these big mergers take place, they
lay off people, and they close down branch banking. That is why we have
what we call deserts that exist in communities; deserts because there
is no branch banking. The big boys don't really care about branch
banking. They are big, and they are doing exactly what I have indicated
by making more money by laying off more people, having less services,
and charging larger interest rates. I am not on the side of big banks.
I am on the side of the people.
Let me continue. The Republicans may claim this resolution also
prevents the OCC from updating its merger review procedures in the
future. Why would they want to do that with just one banking agency?
Perhaps they forgot that we have two other Federal banking agencies,
the Federal Reserve and the Federal Deposit Insurance Corporation. Not
only will this resolution freeze the OCC's review procedures in time
and arguably prevent them from even providing guidance to applicants on
how their review procedures work, but it allows other Federal bank
regulators, the FDIC and the Federal Reserve, to update their
procedures.
{time} 1445
This would likely lead to regulatory arbitrage, where banks seek to
merge with banks within a charter where the primary regulator has the
weakest review standards.
In fact, we saw this kind of arbitrage in the lead-up to the 2008
global financial crisis when the weakest banks would seek to get a
charter from the weakest regulator, the Office of Thrift Supervision,
OTS, until their banks failed and Congress shut down the agency in
2008.
Mr. Speaker, I reserve the balance of my time.
Mr. BARR. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I will address a couple of the arguments that were just
made.
I think I heard the ranking member say that what we are trying to do
is let them do whatever they want to do. That is actually not at all
the case. The merger review process is a very involved process. There
is quite a bit of
[[Page H2172]]
scrutiny that goes into approving these mergers. In fact, what we want
to do here with the resolution disapproving of this is to actually
force the agencies to make a decision one way or the other.
The problem we have seen, especially in the previous administration,
is not necessarily that they disapproved a merger. They just didn't
make a decision. If it is in the interest of financial stability to
reject a bank merger, then that very well could be a legitimate
regulatory decision, but make the decision. That is what we are saying
here: Make the decision.
Mr. Speaker, if the gentlewoman is concerned about layoffs and
employees of banks losing their jobs, the surest way that you will have
massive layoffs and workers losing their jobs is for a bank merger
application to be presented to the agencies and have literally no
decision because guess where the acquisition target employees are going
to go. They are going to go away. They are not going to stay with the
bank.
What we are saying is: Give the merger applicant a decision one way
or the other. That is the best way you can have worker retention in the
banking sector.
Mr. Speaker, I yield 2 minutes to the gentleman from North Carolina
(Mr. Moore).
Mr. MOORE of North Carolina. Mr. Speaker, I rise today in support of
S.J. Res. 13 to overturn a Biden-era rule that threatens competition,
undermines community banks, and diminishes consumer choice.
Under the Biden-Harris administration, the Office of the Comptroller
of the Currency introduced unnecessary impediments to prevent healthy
bank mergers with limited justification. Community banks are the
cornerstone of local communities, and often mergers present an
opportunity to allow them to better keep up with costly compliance and
technology costs.
Unlike the Member from California, I represent a rural area in North
Carolina. I have seen firsthand what happens to banks that are not
allowed to grow; frankly, because of a lot of the overregulation that
they have had to deal with, particularly these last 4 years in the
Biden administration.
Mr. Speaker, I have seen the opposite. I have seen the fact that
North Carolina continues to grow, that thousands and thousands of
people are leaving from States like California where they are
overregulated and overtaxed. They are voting with their feet and coming
to States that are much, much more business friendly and much more
consumer friendly. That is the kind of policies that we need to be
adopting in Washington.
This resolution is going to ensure that future administrations cannot
create complicated review processes that lock out competition, provide
unnecessary delay, and keep things in limbo for unknown periods of
time.
In the true spirit of competition, this resolution cuts burdensome
red tape and allows banks to get back to what they do best: serving
customers and serving communities. This is a step in the right
direction.
Mr. Speaker, comments were made earlier on the other side about the
big, beautiful bill that we are going to be passing hopefully this
week. This is another step to move this economy forward, to finally
unshackle American energy, to finally move forward and reduce taxes,
and to let that American spirit continue to grow.
These are the kinds of things that we need to be doing. These are the
kinds of things that we are doing, and I appreciate the gentleman
yielding me time.
Mr. BARR. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I thank the gentleman for his excellent comments. I
think another important point that needs to be made in the context of
this resolution of disapproval of the Biden-era OCC rule is what is
actually happening in the marketplace.
I think the arguments made on the other side of the aisle assume an
antiquated market where the only competition that exists are banks,
competing with banks. That is not the case anymore. We are living in
2025. In 2025, the advent of all kinds of nonbank financial services
has to be taken into account when you look at the merger landscape in
banking.
We have fintechs. We have nonbanks. There are credit unions. There is
farm credit. There are all kinds of payment systems, movement to
stablecoins and the blockchain. Financial services look a whole lot
different than it did even 25 years ago.
Mr. Speaker, when you are doing an analysis of the propriety of a
bank merger, you can't just look at whether or not this leads to some
level of consolidation in the banking sector. You have to look at it in
terms of competition across the financial services landscape.
In order to achieve the scale, to provide the same level of services,
to provide the same level of technological convenience, and to provide
the same level of underwriting and access to capital that consumers are
being accustomed to now in this very competitive landscape, healthy
mergers are needed for banks to compete with all of the financial
technology that is happening in the economic landscape.
That is not being taken into consideration by my friends on the other
side of the aisle.
Mr. Speaker, I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, we tend to come to the floor when we are producing
legislation, and we talk about a lot of ways that bills have to go
through different kinds of discussions, different kinds of meetings, et
cetera. Oftentimes, the people don't really understand what we are
saying when we talk about things like mergers, and we talk about the
OCC and we talk about review and all of that.
Let me just try and talk about it in ways that people understand.
First of all, I have said and I stand by the fact that with these big
bank mergers, they close down branch banking. They close down the banks
in the communities. Why do they do that? They do that because they want
to save money. Yet, what happens when they close down the bank?
Mr. Speaker, in many communities and in my own community, when banks
were closed down, all you had was the ATM. You didn't have anybody you
could talk to. When people go to the bank and they only have the ATM,
what do you do when you want to talk about an automobile loan? What do
you do when you want to talk about a mortgage? Who do you talk to? Who
answers questions about the credit cards and about things that show up
on the credit card that you don't know about? Who do you talk to?
Mr. Speaker, I don't know who you talk to. You sure can't ask the ATM
about that. The ATM cannot give you the kinds of services that branches
give you. The reason branches were there in the first place are when
you have these big bank mergers that close down the branch bankers.
Mr. Speaker, I will elaborate on an earlier point that I made. We
have seen how the largest banks have grown too big to manage through
these bank mergers and then repeatedly broke the law and harmed their
customers.
For example, a few years ago, when I chaired the Committee on
Financial Services, we investigated Wells Fargo after they were found
to have engaged in a pattern and practice of violating the law.
The bank illegally repossessed servicemembers' cars. They failed to
submit a credible living will. They overcharged small business
retailers for credit card services. They flunked their Community
Reinvestment Act exam. They discriminated against people of color who
were seeking mortgage loans.
To top it off, they pressured their employees to cross-sell their
products, which led to the creation of millions of fake accounts
without customers' permission so that staff could reach unrealistic
sales goals.
Mr. Speaker, I don't think my colleague on the opposite side of the
aisle would want to challenge me on that because that is why we fined
them when we discovered what they had done.
Can the Speaker imagine a huge bank like Wells Fargo, too big to
manage, having all of this unlawful activity and leading to the
creation of millions of fake accounts without customers' permission so
that staff could reach these unrealistic sales goals? This is
unbelievable, but this is what happened. My colleagues on the other
[[Page H2173]]
side of the aisle know that this happened, and they know what we had to
do with Wells Fargo.
As a matter of fact, it was after all of this revelation about these
unlawful activities that we were able to at least help get rid of some
board members and the CEO. They all had to go.
Yet, this is what happens when you allow big, big banks to keep
merging. They are too big to manage, and they give up on customer
service that branch banking is all about. I bring that to the Speaker's
attention so that I could make my colleagues on the other side of the
aisle remember what happened with Wells Fargo.
Wells Fargo was originally founded in 1852, and it grew, in part,
through several bank mergers, including a 1998 merger with Northwest
and an acquisition of Wachovia during the 2008 financial crisis. Wells
Fargo became one of the biggest banks and the tenth largest public
company in the world based on sales, profits, assets, and market value.
Yet, in our investigation, we learned that a senior official at
Northwest had an aggressive cross-selling and product sales strategy,
and he brought that approach to Wells Fargo. This strategy was adopted
and spread throughout the business, including to former Wachovia
branches and retail bank operations that Wells Fargo acquired.
Wells Fargo's CEO, John Stumpf, was fully aware that Wells Fargo's
focus on this cross-selling combined with aggressive sales goals and
associated incentive compensation plans could encourage employees'
gaming and create compliance problems.
The bank was fined again and again until, in 2018, I pushed the bank
regulators to use their full toolkit to hold a repeat offender like
Wells Fargo accountable. The Federal Reserve, under former Chair Janet
Yellen's leadership that I mentioned earlier about putting a cap on
assets, used one of the tools regulators rarely use--and I repeat:
Rarely is this used--to impose an asset cap on the bank until the bank
cleaned up its act.
What it said basically was: You can't keep doing this and making
money. You can't keep doing this and profiting off of the backs of your
customers. You can't keep doing this and getting richer and richer, and
so she put an asset cap on the bank until the bank cleaned up its act.
That cap remains in place 7 years later.
Mr. Speaker, I hope Members will think of our constituents, including
the servicemembers, the seniors, the students, the veterans, and our
neighbors that Wells Fargo harmed when deciding if we could make bank
mergers easier. If my colleagues do, they will vote ``no'' on this
harmful resolution.
Mr. Speaker, I reserve the balance of my time.
Mr. BARR. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, listening to my colleague from California just reminds
me to make the point that economies of scale are not inherently bad.
Economies of scale and big, large financial institutions serve our
economy. Community banks serve our economy. Midsize banks serve our
economy. Regional banks serve our economy. Super-regional banks serve
our economy, and big banks serve our economy. They serve different
parts of the economy.
At the larger end, the globally and systemically important financial
institutions make markets. They are part of why we have the deepest,
most liquid, and most competitive capital markets on planet Earth. This
is not a bad thing. This is a good thing.
Those large institutions are capable of serving large, multinational
corporations that make the United States a destination for capital
flows in our country. They are a magnet for foreign direct investment.
They help us with countering terrorism. They give us a global
visibility that we wouldn't have if we didn't have large globally
important financial institutions that were forward positioned in other
continents that allowed us visibility into financial flows and helped
our law enforcement and our intelligence agencies find bad actors.
{time} 1500
That is a good thing. That is not a bad thing. It is important,
though, that we preserve the dynamism and the diversity of our banking
sector. That is why we also want large regional banks, regional banks,
midsize banks, and, yes, community banks and microbanks. We want it
all. It is the diversity and heterogeneity of the banking sector that
makes our system the best in the world.
That is why we want healthy mergers. We want de novo charters to
backfill, but we want healthy mergers so that we have a constantly
dynamic and healthy banking system.
Now, the gentlewoman cites this one particular case of fraud in one
large bank, and she is right. It was a bad case, and it was properly
punished by the regulators. She cites to a case of cross-selling and
overly aggressive marketing and a sales goals program and compliance
problems. It is true. There were, but it is not because there are
healthy mergers in this country that that happened. That is not why
that happened. That could have happened in a regional bank. That could
have happened even in a smaller bank. It happened to happen in a larger
bank, but guess what?
There are a lot of other large banks in this country where they
didn't have those problems. When there are problems, that is why we
have regulators and bank examiners. They fix those problems to make
sure that they never happen again. You know what can help prevent those
problems from happening even more than regulators, even more than
central planning from Washington? Mr. Speaker, it is competition and
choice.
That particular institution that the gentlewoman is talking about,
maybe they didn't have enough competition. Maybe they didn't have
enough competition, Mr. Speaker, because we had regulators that
prevented healthy mergers to enter into their market space and actually
compete and take customers who are unsatisfied with that cross-selling.
The whole point here is that we want a dynamic marketplace so that we
can create competition. That is the best form of consumer protection,
not a regulator, not an examiner, not regulatory inaction, or
regulatory indecision. That is not consumer protection, but healthy
mergers that allow for greater competition of the big banks. That is
the way to protect consumers.
I will make one other point before I reserve, as well. When we say
that large banks are not inherently bad, what we mean by that is that
when you allow for a merger, let's say, of two regional banks, and you
allow that scale, that economies of scale to take place, and where
there are investments in technology, not only do you give the customers
of that larger institution, that successor merged institution with
greater resources to provide lower cost services, more technological
advancements, but, yes, you allow them to invest in what? They invest
in consumer protection.
You allow them to make sure that people in their organization are not
making mistakes with cross-selling, making sure that they are using the
latest technology to ensure that everybody is getting the right deal
and the best deal and the most financial inclusion possible given that
particular customer's circumstances.
Far from promoting problems, this resolution will actually help solve
the problems.
Mr. Speaker, I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, as we consider whether we should make the approval of
bank mergers easier, I have another example of how mergers have led to
major problems.
In 2020, the Federal Reserve and the OCC fined Citigroup $400 million
over serious ongoing deficiencies relating to its risk management
systems.
Now, this is very, very important. Every bank must have risk
management but when they get too huge not only do they not have the
proper risk management, it doesn't work very well. It was a
longstanding issue that Citi had after they went through a series of
mergers in the 1990s.
When the 2020 fine of $400 million was imposed, there was an article
in The Wall Street Journal that explained how mergers harm the bank.
They wrote: ``Regulators have long fretted that the hodgepodge of
systems, a legacy of a string of deals in the 1990s that turned
Citigroup into a financial powerhouse, could make the bank vulnerable
to
[[Page H2174]]
costly and potentially damaging missteps.''
They were too big to manage.
``A recent high-profile error--Citigroup's accidental $900 million
payment to creditors of cosmetics company Revlon, Inc.--gave credence
to their concerns.''
That is right. The bank lacked sufficient controls because of its
past mergers--too big to manage--and accidentally paid $900 million to
Revlon, which quickly went into litigation.
The bank did not correct their problems. Regulators fined them again
last year, but earlier this year, we learned that Citibank made another
big payment error. The bank--I love this one--intended to pay a
customer $280 but someone accidentally added way too many zeros to the
transaction. For 90 minutes before an employee caught the mistake, one
lucky customer had $81 trillion credited to their account.
Unfortunately, for that customer, the bank corrected their error and
far too often these kinds of mismanagement mistakes actually lead to
harm for consumers.
In fact, since 2000, Citigroup has paid over--listen to this--$27
billion in fines, settlements, and consumer remediation, including 42
actions related to consumer protection violations. This includes
discriminating against Armenian-American credit card applicants,
overcharging other credit card holders, and mortgage servicing
violations that could have helped homeowners avoid failure.
Again, this is the logical conclusion if we have faster mergers. We
will have fewer and fewer banks that are bigger and bigger and, indeed,
too big to manage.
Let me just say: When I said how much they had been fined just a
moment ago, Citigroup, one could think how could they be fined that
much money? How can they afford it? Where do you think they got that
money from? Where do you think that money came from? Why do you think
that doesn't matter to the big banks? It is just a matter of doing
business.
Do you know where that money comes from? It comes from the customers.
That is why we have to make sure that the customers are serviced
properly, that when a big merger wants to have support from the
government, that they will have been vetted in such a way that OCC
understands very well: How are you going to service these customers?
Are you going to close down these branch bankers? How are you going to
help somebody that is looking for a mortgage? What are you going to do
to the person that can't talk to the ATM because they are trying to get
a car loan?
These are legitimate questions. These are legitimate answers that
need to be given.
I will say this: The money does not fall out of the sky that allows
them to pay millions and millions of dollars in fines. It comes from
charging the customers, increasing interest rates, laying off employees
so you have less employees to pay, and the services get worse and worse
and worse.
The customers are the victims of these big mergers who do not want to
be reviewed properly and who you support in not wanting to be reviewed
properly.
Mr. Speaker, I reserve the balance of my time.
Mr. BARR. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, let me give you an example of where a merger that was
recently approved certainly doesn't hurt consumers but helps consumers
and creates more competition.
The gentlewoman cites the approval of the Capital One-Discover
merger. Do you know what that merger did? It created a third option, in
addition to MasterCard and Visa, for consumers to access in terms of a
payment network. That is not diminishing competition. That is creating
more competition. It is more competition for Visa and more competition
for MasterCard. Ask Visa and MasterCard. They will tell you.
This is a very formidable competitor to MasterCard and Visa now that
there is an approved merger between Capital One, a substantial credit
card business, a substantial payment business, and Discover with their
substantial network. You create a third option for consumers. That is
procompetition, not anticompetition.
I will make another point. This is not just about big banks. It is
about small community banks. We are scrutinizing today the Biden OCC's
regulation.
What did that regulation do, Mr. Speaker? It eliminated expedited
procedures for approval of what? It eliminated expedited procedures for
approval of community bank mergers, small noncomplex mergers that would
allow those community banks to serve those small communities better.
That regulation eliminated that.
Here is what the trade association of the smallest banks in America
says about that Biden regulation. Here is what the small banks say
about that regulation.
``ICBA strongly opposes the elimination of the expedited review and
streamlined applications. . . . not every transaction is complex. For
example, in instances where two community banks within the same market
attempt to merge, and the merger does not pose significant financial
stability, consumer protection, competition or safety, and soundness
concerns, the OCC should treat the transaction as noncomplex and permit
for review under streamlined procedures.''
It makes sense to me that we would have streamlined, expedited
procedures so that we can make sure community banks can continue to
compete. This is not about big banks. It is about small banks and the
survival of small banks under the avalanche of red tape that came at
them after Dodd-Frank, after the avalanche of competition from nonbanks
and credit unions and fintechs and blockchain companies. We want these
small banks to survive, to continue to serve their communities. This is
the way they do it.
Finally, I will make a point that hasn't really been discussed here
today in this debate; that is, we should remember the lessons of
Silicon Valley Bank. There was a very, very significant panic because
of the failure of Silicon Valley Bank and there was a run on that bank.
We don't want that to happen again. We don't want a panic. We don't
want a run. We want to prevent bank failures, and the way to prevent
bank failures is to allow strong banks to acquire weak banks. We want
to make sure that a failing bank can be saved by a white knight.
Delaying approvals of healthy mergers is very dangerous for financial
stability.
We need this legislation so that we never have a bad regulation that
would prevent regulators from allowing expedited approval of mergers
that help save the system.
Mr. Speaker, I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I am just sitting here being absolutely shocked by some
of my own words when I take a look at the fines that we have charged
both Citi and Wells Fargo. I see that each of them have paid $27
billion in fines, but they are still in business. Do you know why? It
is because they make so much money. This is just the cost of doing
business. We break the law. They are going to fine us, but we can
afford it. We will go on doing what we do. This is what happened with
the big, big banks that you allow to merge without understanding what
they are all about and what is their commitment to the consumers.
As a matter of fact, they can afford to pay $57 billion in fines,
money that they have collected from their customers. They only see this
as the cost of doing business, and they keep on doing business, keep on
getting fined. What are we talking about?
Listen, I am not opposed to credible mergers. Democrats just want
mergers that result in a bank that will follow the law and serve the
community. We want to make sure that they have the systems in place and
the management to follow the law. Why? Because the consumer is on the
hook and the taxpayer is on the hook; that is why.
Mr. Speaker, I want my colleagues to know that I have not talked to
anybody recently who was happy with their bank. They have problems
getting services because the banks keep cutting back on employees and
trying to push everybody to the ATM.
We can do better than this. We can understand when the mergers want
to take place, who these entities are that want to merge, how huge this
is going to make this bank, and what they are going to do about branch
banking.
[[Page H2175]]
Mr. Speaker, I yield back the balance of my time.
{time} 1515
Mr. BARR. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, former Federal Reserve Governor and now-Vice Chair for
Supervision Michelle Bowman, who talked about the procompetition
benefits of healthy mergers, said: ``Reducing the efficiency of bank
M&A can be a deterrent to healthy bank transactions. It can reduce the
effectiveness of M&A activity that preserves the presence of community
banks in underserved areas, prevent institutions from pursuing prudent
growth strategies, and actually undermine competition by preventing
firms from growing to a larger scale, effectively creating a `protected
class' of larger institutions.''
Mr. Speaker, we had a hearing that was called when the ranking member
was the chair. She called in all the CEOs of the biggest banks in the
country. In this particular hearing, the gentlewoman from California
also hauled in some of the CEOs of the regional banks, the big regional
banks, in addition to the G-SIB Wall Street banks.
I noticed that the CEO of a successor institution that was formed by
the merger of two regional banks was sitting right next to the CEO of
one of the largest banks on planet Earth, so I said to the CEO of one
of the largest banks on planet Earth: This gentleman who is now the CEO
of a big regional bank is sitting next to you. Can you tell me what a
more formidable competitor to your big Wall Street bank is? Is it the
original small regional bank, the other small regional bank, or is it
the combination of those two regional banks that made a bigger regional
bank?
He said: Undoubtedly, it is the bigger regional bank that poses a
bigger competitive threat to me, the big Wall Street bank.
Not all mergers are bad. There are a lot of mergers that help create
more competition. That is what we want.
More importantly, Mr. Speaker, it provides better financial services
and products and access to the American Dream for the American people.
That is why we want to disapprove this bad regulation. That is why we
want to make sure that mergers are allowed to allow for distressed
banks to sell themselves instead of failing, thereby insulating the
Deposit Insurance Fund from losses.
This is to help financial stability, Mr. Speaker. I urge all of my
colleagues, for the reasons that we have outlined today, to help us
invalidate this bad regulation and to make sure that no regulator in
the future can pass another bad regulation like this that would prevent
healthy mergers.
For goodness' sake, if you want dynamism and competition in a diverse
banking system, support our agenda that not only allows for healthy
mergers but also provides for regulatory tailoring so that we provide
relief to small community banks so that they can compete, relief to the
regional banks so that they can compete, and, for goodness sake, clear
the way for de novo charters, new banks, to come into the system.
I don't know, for the life of me, why my friends on the other side of
the aisle who complain about big banks won't allow for healthy mergers
to compete with them, won't allow for new banks to come into the system
by overregulating the heck out of the sector, and won't allow there to
be a dynamic, diverse banking system.
Mr. Speaker, for these reasons and others, as I explained earlier, I
urge my colleagues to support this resolution, and I yield back the
balance of my time.
The SPEAKER pro tempore (Mr. Fine). All time for debate has expired.
Pursuant to the rule, the previous question is ordered on the joint
resolution.
The question is on the third reading of the joint resolution.
The joint resolution was ordered to be read a third time, and was
read the third time.
The SPEAKER pro tempore. The question is on passage of the joint
resolution.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Ms. WATERS. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
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