Banks to Face Stricter Merger Rules Under OCC Proposal

Karen Solomon’s commentary was included in a Global Banking Regulation Review article discussing U.S. Office of the Comptroller of the Currency (OCC) changes that will affect the agency’s approach to reviewing deals between national banks and federal savings associations under the Bank Merger Act (BMA) and other legislation.

Karen said applicants mostly look for timeliness and predictability in regulatory decision-making and that the most persistent complaints about the OCC application process tend to be that it takes much too long to get to a decision, and that it is hard to predict how the regulator will exercise the discretion it has under the statute. “The proposal does not fix the timing issue – if anything, it suggests that decisions will take longer because of the number and variety of factors that the OCC will consider,” she explained.

She also noted that it is useful to see what those factors show about the OCC’s “lean.” “For instance, the factors confirm that the OCC favors smaller transactions where the acquirer has a clean fair lending, consumer compliance, and BSA/AML record. But the list is of limited practical utility for predicting outcomes because the OCC reserves the ability to base its decision on a ‘significant legal or policy issue,’ which won’t necessarily be apparent at the outset of the process, and because decisions are always based on institution-specific information which is confidential and prohibited from disclosure under the agency’s rules.”