Bank Merger Review Modernization Act of 2019

II 116TH CONGRESS 2D SESSION S. 3213 To amend certain banking laws to establish requirements for bank mergers, and for other purposes. IN THE SENATE OF THE UNITED STATES JANUARY 16, 2020 Ms. WARREN introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend certain banking laws to establish requirements for bank mergers, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Bank Merger Review Modernization Act of 2019’’. 5 (b) TABLE OF CONTENTS.—The table of contents for 6 this Act is as follows: 7 Sec. 1. Short title; table of contents. Sec. 2. Compliance with Federal consumer financial laws. Sec. 3. Cost-benefit analysis for merger transactions. Sec. 4. Community Reinvestment Act performance. Sec. 5. Financial stability considerations for merger transactions. Sec. 6. Financial criteria for certain merger transactions. Sec. 7. Managerial criteria for certain merger transactions. VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 3213 IS Sec. 8. Competitive effects. Sec. 9. Transparency in merger review. Sec. 10. Financial stability exception. Sec. 11. Citizen standing. SEC. 2. COMPLIANCE WITH FEDERAL CONSUMER FINAN- 1 CIAL LAWS. 2 (a) APPLICATION FOR MERGERS OR ACQUISI- 3 TIONS.— 4 (1) IN GENERAL.—Not later than 180 days 5 after the date of the enactment of this Act, the Di- 6 rector of the Bureau of Consumer Financial Protec- 7 tion shall establish procedures for a covered appli- 8 cant to submit an application to directly or indirectly 9 merge with, or directly or indirectly acquire, a per- 10 son that offers or provides consumer financial prod- 11 ucts or services (as defined in section 1002 of the 12 Consumer Financial Protection Act of 2010 (12 13 U.S.C. 5481(14))). 14 (2) PUBLIC COMMENT.—The Director shall 15 allow a period of at least 30 days for public com- 16 ment on applications submitted under paragraph 17 (1). 18 (b) PROHIBITION.—It shall be unlawful for a covered 19 applicant to directly or indirectly merge with, or directly 20 or indirectly acquire, a person that offers or provides con- 21 sumer financial products or services (as defined in section 22 1002 of the Consumer Financial Protection Act of 2010 23 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 3213 IS (12 U.S.C. 5481(14))) without the prior written approval 1 of the Director. 2 (c) CONSIDERATIONS.—In considering an application 3 under subsection (a), the Director shall— 4 (1) consider the records of the covered appli- 5 cant and the person with respect to compliance with 6 the Federal consumer financial laws; and 7 (2) deny such application if the resulting insti- 8 tution would not have adequate systems in place to 9 ensure compliance with the Federal consumer finan- 10 cial laws. 11 (d) COVERED APPLICANT DEFINED.—In this section, 12 the term ‘‘covered applicant’’ means an insured depository 13 institution (as defined in section 3 of the Federal Deposit 14 Insurance Act (12 U.S.C. 1813)) or a depository institu- 15 tion holding company (as defined in such section) with 16 more than $10,000,000,000 in total assets. 17 SEC. 3. COST-BENEFIT ANALYSIS FOR MERGER TRANS- 18 ACTIONS. 19 (a) INSURED DEPOSITORY INSTITUTIONS.—Section 20 18(c) of the Federal Deposit Insurance Act (12 U.S.C. 21 1828(c)) is amended by adding at the end the following 22 new paragraph: 23 ‘‘(14) ANALYSIS OF COSTS AND BENEFITS.— 24 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 3213 IS ‘‘(A) IN GENERAL.—The responsible agen- 1 cy shall not approve any proposed merger 2 transaction under this subsection unless the re- 3 sponsible agency determines that the public 4 benefits of the merger transaction outweigh the 5 expected costs. 6 ‘‘(B) EVALUATION.—In evaluating the ex- 7 pected costs of the proposed merger transaction 8 under subparagraph (A), the responsible agency 9 shall consider— 10 ‘‘(i) the probable effect of the pro- 11 posed merger transaction on the cost and 12 availability of financial products and serv- 13 ices; 14 ‘‘(ii) the probable effect of branch clo- 15 sures on customers of each bank or savings 16 association involved in the proposed merger 17 transaction; 18 ‘‘(iii) the probable effect of the pro- 19 posed merger transaction on relevant local 20 economies, including employment losses re- 21 lating to branch closures and impacts on 22 job quality; and 23 ‘‘(iv) any other cost of the proposed 24 merger transaction that the responsible 25 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 3213 IS agency considers pursuant to this sub- 1 section.’’. 2 (b) BANK HOLDING COMPANIES.— 3 (1) PROPOSED ACQUISITIONS, MERGERS, OR 4 CONSOLIDATIONS.—Section 3(c) of the Bank Hold- 5 ing Company Act of 1956 (12 U.S.C. 1842(c)) is 6 amended by adding at the end the following new 7 paragraph: 8 ‘‘(8) ANALYSIS OF COSTS AND BENEFITS.— 9 ‘‘(A) IN GENERAL.—The Board may not 10 approve an application under this section unless 11 the Board determines that the public benefits of 12 the proposed transaction outweigh the expected 13 costs. 14 ‘‘(B) EVALUATION.—In evaluating the ex- 15 pected costs of the proposed transaction under 16 subparagraph (A), the Board shall consider— 17 ‘‘(i) the probable effect of the pro- 18 posed transaction on the cost and avail- 19 ability of financial products and services; 20 ‘‘(ii) the probable effect of branch clo- 21 sures on customers of each company in- 22 volved in the proposed transaction; 23 ‘‘(iii) the probable effect of the pro- 24 posed transaction on relevant local econo- 25 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 3213 IS mies, including employment losses relating 1 to branch closures and impacts on job 2 quality; and 3 ‘‘(iv) any other cost of the proposed 4 transaction that the Board considers pur- 5 suant to this subsection.’’. 6 (2) OTHER TRANSACTIONS OR ACTIVITIES.— 7 Section 4(j)(2) of the Bank Holding Company Act 8 of 1956 (12 U.S.C. 1843(j)(2)) is amended by add- 9 ing at the end the following new subparagraph: 10 ‘‘(D) ANALYSIS OF COSTS AND BENE- 11 FITS.— 12 ‘‘(i) IN GENERAL.—The Board shall 13 deny a notice filed pursuant to this sub- 14 section unless the Board determines that 15 the public benefits of the proposed trans- 16 action or activity described in the notice 17 outweigh the expected costs. 18 ‘‘(ii) EVALUATION.—In evaluating the 19 expected costs of the proposed transaction 20 under subparagraph (A), the Board shall 21 consider— 22 ‘‘(I) the probable effect of the 23 proposed transaction or activity on 24 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 3213 IS the cost and availability of financial 1 products and services; 2 ‘‘(II) the probable effect of 3 branch closures on customers of each 4 company involved in the proposed 5 transaction or activity; 6 ‘‘(III) the probable effect of the 7 proposed transaction or activity on 8 relevant local economies, including 9 employment losses relating to branch 10 closures and impacts on job quality; 11 and 12 ‘‘(IV) any other cost of the pro- 13 posed transaction or activity that the 14 Board considers pursuant to this 15 paragraph.’’. 16 SEC. 4. COMMUNITY REINVESTMENT ACT PERFORMANCE. 17 (a) INSURED DEPOSITORY INSTITUTIONS.—Section 18 18(c) of the Federal Deposit Insurance Act (12 U.S.C. 19 1828(c)), as amended by section 3, is further amended 20 by adding at the end the following new paragraphs: 21 ‘‘(15) COMMUNITY REINVESTMENT ACT PER- 22 FORMANCE.—The responsible agency shall not ap- 23 prove a proposed merger transaction under this sec- 24 tion if the largest insured depository institution that 25 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 3213 IS is party to such transaction, based on a comparison 1 of the average total risk-weighted assets controlled 2 by each insured depository institution that is party 3 to such transaction during the previous 12-month 4 period, has received a rating lower than ‘outstanding 5 record of meeting community credit needs’ on— 6 ‘‘(A) two out of the three most recent writ- 7 ten evaluations required under section 807 of 8 the Community Reinvestment Act of 1977 (12 9 U.S.C. 2906); or 10 ‘‘(B) if three such evaluations are not 11 available, the most recent written evaluation re- 12 quired under such section. 13 ‘‘(16) COMMUNITY BENEFITS PLAN.— 14 ‘‘(A) IN GENERAL.—In reviewing any ap- 15 plication filed under this paragraph, the respon- 16 sible agency shall require— 17 ‘‘(i) submission to the appropriate 18 Federal financial supervisory agency of a 19 community benefits plan; 20 ‘‘(ii) that the insured depository insti- 21 tution consult with community-based orga- 22 nizations and other community stake- 23 holders in developing the community bene- 24 fits plan; and 25 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 3213 IS ‘‘(iii) a public hearing to be held if 1 any insured depository institution involved 2 in the transaction has received a ‘substan- 3 tial noncompliance in meeting community 4 credit needs’ or ‘needs to improve record of 5 meeting community credit needs’ rating in 6 any assessment area during the last exam- 7 ination of such institution conducted pur- 8 suant to the Community Reinvestment Act 9 of 1977. 10 ‘‘(B) DEFINITION.—For purposes of this 11 paragraph, ‘community benefits plan’ means a 12 plan that provides measurable goals for future 13 amounts of safe and sound loans, investments, 14 services, and other financial products for low- 15 and moderate-income communities and other 16 distressed or underserved communities.’’. 17 (b) BANK HOLDING COMPANIES.— 18 (1) PROPOSED ACQUISITIONS, MERGERS, OR 19 CONSOLIDATIONS.—Section 3(c) of the Bank Hold- 20 ing Company Act of 1956 (12 U.S.C. 1842(c)), as 21 amended by section 3, is further amended by adding 22 at the end the following new paragraphs: 23 ‘‘(9) COMMUNITY REINVESTMENT ACT PER- 24 FORMANCE.—The Board shall deny an application 25 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 3213 IS under this section if either the lead insured deposi- 1 tory institution of the applicant or the insured de- 2 pository institution that would be the lead insured 3 depository institution of the resulting company fol- 4 lowing consummation of the proposed transaction 5 has received a rating lower than ‘outstanding record 6 of meeting community credit needs’ on— 7 ‘‘(A) two out of the three most recent writ- 8 ten evaluations required under section 807 of 9 the Community Reinvestment Act of 1977 (12 10 U.S.C. 2906); or 11 ‘‘(B) if three such evaluations are not 12 available, the most recent written evaluation re- 13 quired under such section. 14 ‘‘(10) COMMUNITY BENEFITS PLAN.— 15 ‘‘(A) IN GENERAL.—In reviewing any ap- 16 plication filed under this paragraph, the Board 17 shall require— 18 ‘‘(i) submission to the appropriate 19 Federal financial supervisory agency of a 20 community benefits plan; 21 ‘‘(ii) that the company consult with 22 community-based organizations and other 23 community stakeholders in developing the 24 community benefits plan; and 25 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 3213 IS ‘‘(iii) a public hearing to be held if 1 any bank that would be controlled by the 2 resulting company has received a ‘substan- 3 tial noncompliance in meeting community 4 credit needs’ or ‘needs to improve record of 5 meeting community credit needs’ rating in 6 any assessment area during the last exam- 7 ination of such institution conducted pur- 8 suant to the Community Reinvestment Act 9 of 1977. 10 ‘‘(B) DEFINITION.—For purposes of this 11 paragraph, ‘community benefits plan’ means a 12 plan that provides measurable goals for future 13 amounts of safe and sound loans, investments, 14 services, and other financial products for low- 15 and moderate-income communities and other 16 distressed or underserved communities.’’. 17 (2) OTHER TRANSACTIONS OR ACTIVITIES.— 18 Section 4(j)(2) of the Bank Holding Company Act 19 of 1956 (12 U.S.C. 1843(j)(2)), as amended by sec- 20 tion 3, is further amended by adding at the end the 21 following new subparagraphs: 22 ‘‘(E) COMMUNITY REINVESTMENT ACT 23 PERFORMANCE.—The Board shall deny a notice 24 filed pursuant to this subsection if the lead in- 25 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 3213 IS sured depository institution of the applicant or 1 the insured depository institution that would be 2 the lead insured depository institution of the re- 3 sulting company following consummation of the 4 proposed transaction or activity has received a 5 rating lower than ‘outstanding record of meet- 6 ing community credit needs’ on— 7 ‘‘(i) two out of the three most recent 8 written evaluations required under section 9 807 of the Community Reinvestment Act 10 of 1977 (12 U.S.C. 2906); or 11 ‘‘(ii) if three such evaluations are not 12 available, the most recent written evalua- 13 tion required under such section. 14 ‘‘(F) COMMUNITY BENEFITS PLAN.— 15 ‘‘(i) IN GENERAL.—In reviewing any 16 notice filed under this paragraph, the 17 Board shall require— 18 ‘‘(I) submission to the appro- 19 priate Federal financial supervisory 20 agency of a community benefits plan; 21 ‘‘(II) that the company consult 22 with community-based organizations 23 and other community stakeholders in 24 VerDate Sep 11 2014 21:41 Jan 17, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S3213.IS S3213 pamtmann on DSKBC07HB2PROD with BILLS 13 •S 3213 IS developing the community benefits [Text truncated for display. 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