Enhancing Competition: Shaping the Future of Bank Mergers and De Novo Formation
House Financial Services Subcommittee on Monetary Policy and Trade
2025-05-14
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Source: Congress.gov
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4,500 today. When I was a business owner starting and growing our small business, I saw the value of having a diverse banking system with a wide distribution of institutions by size firsthand. Having multiple banks in the community strengthened the negotiating power of our small businesses and the many others in our area by forcing financial institutions to compete with one another for our business. Strong competition in the banking system has been shown to lead to better terms, better interest rates, and services for American communities. I don't think there's a single member of this committee that doesn't believe that we should use our positions here to support small community banks and credit unions. To do so, we should enact policies that support those institutions, as well as the community development financial institutions and minority depository institutions that step in to fill the gaps left by other firms. And today, these institutions also face unprecedented economic and regulatory uncertainty brought on by the Trump administration's new policies. The president has doubled down on the market wrenching tariff policies from his first term that directly impact the farmers and the rural communities that many members, including myself, represent, as well as paralyzed manufacturers and small businesses who work with our community banks. Examiners of these institutions are being laid off in the name of efficiency. when staff shortages at the Prudential Regulators have been cited by the Inspector Generals as an area of concern. We see a move to cut off funding for the CDFI Fund, which has provided more than $12 billion of support access to credit and to support access to credit in unbanked and underbanked communities. Meanwhile, the Consumer Financial Protection Bureau has effectively been shut down, meaning that small community banks are being supervised for compliance with consumer protection laws. while the biggest banks have no oversight at all in this area. It's easy to say deregulation is the solution to the challenges that community banks and credit unions face, but that sentiment ignores other reforms that would
provide benefits to community banks without risking their safety and soundness. One area that is ripe for reform is deposit insurance. Following the collapse of Silicon Valley Bank, there was a flight of nearly $120 billion of deposits from community banks and two large banks that were seen as too big to fail. Reforms to the discount window, restoration of NCUA's emergency central liquidity fund authorities, and efforts to address the high cost of technology for small banks and credit unions are other areas that I feel we could find bipartisan solutions for. We have an experienced panel before us that has firsthand experience with the merger and de novo processes, and I look forward to your testimony today. Thank you, Chairman. I yield back. Gentleman yields back. The chair now recognizes the chairman of the full committee, Mr. Hill, for one minute. Thank you, Chairman Barr. Today's hearing will continue advancing our Making Community Banking Great Again set of proposals. Our financial institutions need consistent and timely guidance during the bank merger review process. They need the tools at their disposal to make informed decisions about pursuing or withdrawing applications without wasting time and money navigating changing and opaque standards. We must reform the regulatory framework in a way that encourages new bank entrants to enter the market. We can accomplish this by lowering unnecessary barriers, modernizing capital and compliance expectations, and restoring a pipeline for community financial institutions that fuel our economic growth. Legacy rules from Dodd-Frank and recent regulatory trends have discouraged market entry, reduced banking access, and favored consolidation over competition. This is all at the expense of consumers, particularly consumer choice and those in rural and underserved areas. I appreciate Chairman Barr's leadership, and I look forward to our panel discussion.
I yield back. Chairman yields. The chair now recognizes the ranking member of the full committee, Mrs. Waters, for one minute. Thank you very much, Mr. Chairman. Good afternoon, everyone. Republicans want faster bank mergers, which will wipe out community banks and credit unions and leave just a few mega banks to serve our constituents. Trump's regulators just rubber-stamped the Capital One and Discover merger, which will lead to more consumer harm. Democrats support the formation of new or de novo banks, and I'm pleased Mrs. Young is testifying. Mrs. Young bravely responded to lending discrimination by suing the Consumer Financial Protection Bureau, I do believe. And so I would just like to say that I'm very pleased that Ms. Young is here today. And I've been paying attention to what the gentleman, the chairman, has been trying to do. But because this Protection Bureau, this CFPB, was basically challenged by Ms. Young, we're finding that- The gentlelady's time has expired.
The gentlelady's time has expired. Thank you very much. I will listen and I look forward to hearing from the witnesses today.
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