USA Trends and Developments Contributed by: David Sewell, Alison Hashmall and Nariné Atamian, Freshfields
Introduction Following one of the most tumultuous years in recent memory for the US banking industry and its regulators, 2024, by comparison, has been relatively calm. But that is not to say it has been quiet. After the three largest bank failures in US history – as well as the historic merger of Credit Suisse and UBS orchestrated by Swiss authorities – regulators and policymakers in the United States moved quickly to introduce regulatory proposals and guidance meant to enhance and strengthen the stability, resiliency, and resolvability of finan - cial institutions operating in the United States, and also to address perceived regulatory and supervisory gaps across the financial system. Over the course of 2024, many of these pro- posals were finalised, even as others remain pending and subject to ongoing (and sometimes heated) debate – most notably proposals on capital and long-term debt requirements. All this has occurred against the backdrop of Supreme Court rulings that could radically remake the administrative state and in the context of one of the most hard-fought election campaigns in American history. Below we survey key developments for the banking industry from 2024, highlighting trends and issues to watch in the coming months. Evolution in the Bank Merger Framework Bank merger policy has attracted significant attention from industry and policymakers alike in recent years, especially after federal antitrust regulators – the Federal Trade Commission (FTC) and Department of Justice (DOJ) – revised their merger guidelines in 2023. Over the course of 2024, the banking agencies started to clarify
their evolving standards and expectations when reviewing proposed bank mergers. Specifically, both the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued documents detailing their respective approaches to bank mergers on 17 September 2024, the same day the DOJ announced that it will largely use the industry-agnostic 2023 Merger Guidelines when evaluating bank mergers. These updates to the merger framework were long-anticipated and much needed. The guide- lines the US federal antitrust regulators and the federal banking agencies have been using to evaluate proposed transactions under the Bank Merger Act had last been updated in 1995 and were widely recognised to be obsolete. To that end, President Biden’s sweeping 2021 Executive Order on competition in the American economy included a direction to the federal banking agen- cies and the DOJ to review their existing prac- tices and “revitalize merger oversight” under the federal banking laws. Taken together, these developments represent the most significant updates to US merger policy as applied to financial institutions in decades. The OCC and FDIC pronouncements are described in detail below. What remains, how- ever, is an indication as to whether the Federal Reserve Board (FRB) will follow suit – at time of publication, this key agency, the primary super- visor of bank holding companies, had yet to weigh in. OCC merger rule and statement of policy The OCC’s rulemaking on business combina- tions (“OCC Merger Rule”) and accompanying statement of policy will come into effect on 1
642 CHAMBERS.COM
Powered by FlippingBook