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Biden to call for greater bank merger scrutiny, customer control of financial data

The Hill logo The Hill 7/9/2021 Sylvan Lane
Joe Biden wearing a suit and tie: President Biden delivers his Fourth of July remarks outside the White House © Getty Images President Biden delivers his Fourth of July remarks outside the White House

President Biden on Friday will ask bank regulators to adopt tighter standards for approving mergers and allow customers to download their financial transaction data from banks.

Biden is set to sign a sweeping executive order intended to boost competition within the U.S. economy, the White House announced Friday. The order includes two provisions intended to slow consolidation in the banking industry and give customers more freedom to switch banks.

Biden's order will ask the Justice Department, Federal Reserve, Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) to write new, stricter guidelines for bank mergers. Democrats have called out those regulators for allowing a recent string of high-profile bank mergers that they argue hurts customers by giving a small group of larger firms outsized control.

"Though subject to federal review, federal agencies have not formally denied a bank merger application in more than 15 years. Excessive consolidation raises costs for consumers, restricts credit for small businesses, and harms low-income communities," the White House said in a Friday summary of the order.

The order will also ask the Consumer Financial Protection Bureau (CFPB) to write rules forcing banks to allow customers to obtain their transaction information. The rules are intended to reduce the costs and trouble of switching banks by giving customers full ownership and access to crucial information.

The Fed, FDIC, OCC and CFPB are all independent agencies, meaning Biden has no power to make them follow through on the order. The president, however, has installed chiefs at the OCC and CFPB who are likely receptive to those requests and can install up to four new members of the Fed board by next year.

Republicans have also expressed concerns about growing consolidation in the banking industry, but have pinned on the costs of complying with regulations and emerging financial technology companies.

Advocates for the banking industry also cited fintechs as a greater threat to market competition than their own firms.

"By any analysis, banking is among the most competitive, least concentrated industries in America, as anyone who has shopped for a credit card, mortgage or deposit account knows," said Greg Baer, president and CEO of the Bank Policy Institute, a non-profit advocacy and research group for the banking industry.

"Moreover, banks continue to lose business to unregulated FinTechs or government-sponsored enterprises, whose presence in the market current DoJ guidelines inexplicably ignore in assessing market competition. Those guidelines should be amended to reflect the underlying law."

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