A recent Reuters report examined the increased scrutiny U.S. lenders could face following the update release by the Federal Trade Commission and the Department of Justice regarding merged guidelines. Director of the Consumer Financial Protection Bureau, Rohit Chopra highlighted regulators' efforts to prioritize financial stability and its potential ability to impose harsher restrictions on financial institutions, according to a July 20 Reuters report.
"Banks can expect a more rigorous review of applications. The ink on the rubber stamp has dried up and... my hope is to see a shift from the regulators of moving from cheerleader to umpire," Chopra, who also sits on the board of the Federal Deposit Insurance Corporation (FDIC), said.
Chopra’s view stands on the contrary of Treasury Secretary Janet Yellen and Acting Comptroller of the Currency Michael Hsu, who have been open to securing deals to stabilize the mid-size bank industry, Reuters reported.
"There is no question that past adjudications of mergers did not meet the level of analytical rigor that they ought to have," he added, according to Reuters.
While bank executives attribute the lack of merger activity to the increase of regulations, the democratic party disagrees with mergers of large banks, such as JPMorgan’s First Republic acquisition, which was approved by regulators as legal exception for bank transactions under government receivership, the report noted.
"Certainly there are a number of questions about going forward whether that similar outcome is ideal," Chopra said, noting there were other bidders besides JPMorgan, Reuters reported.
Chopra confirmed a process of review in the works following his request to adopt changes to bank merger guidelines, stating "there's no question that certain legal uncertainties might lead to more prolonged or protracted litigation,” according to the report.
"We are continuing to achieve real results in spite of that," he said, noting recent actions taken against Bank of America, Wells Fargo and others, "but it certainly doesn't help," Reuters reported.
“The CFPB is facing a Supreme Court challenge to the constitutionality of its funding, leading federal judges to freeze at least six of the agency's 20 pending enforcement cases until the matter is resolved, according to federal court records,” the Reuters report revealed.
