Bank Competition Modernization Act
Bank Competition Modernization Act is a bill that would change how federal banking regulators evaluate proposed bank acquisitions, mergers, consolidations, assumptions of liabilities, or transfers of assets. The core idea is to broaden what counts as competitive pressure by requiring consideration of a wider set of banking and nonbank entities when regulators assess how a deal might affect competition. Key changes include expanding the categories of entities whose products and services must be considered, and creating an asset-based rule for smaller transactions that would require a positive finding that the deal would not harm competition. Specifically, the bill would amend the Federal Deposit Insurance Act, the Bank Holding Company Act of 1956, and the Home Owners’ Loan Act to (1) require the agencies to consider a broader mix of banking-related entities in competitive analyses, and (2) apply a threshold so that any proposed deal resulting in an entity with less than $10 billion in assets must be deemed not to threaten competition (i.e., not create a monopoly or unduly lessen competition). The intended effect is to modernize how competition is assessed in banking by recognizing nontraditional competitors and various types of financial institutions.
Key Points
- 1Expanded competitive factors: The Attorney General (for FDIC-insured deals) and the Board of the Federal Reserve (and/or the appropriate federal banking regulators) must include a wider slate of entities in competitive-factor analyses, such as depository institutions and holding companies, industrial loan companies, Farm Credit Act entities, nonbank financial companies, and insured or noninsured credit unions, in evaluating proposed transactions.
- 2Asset threshold and presumption for smaller deals: If a proposed transaction would create an entity with less than $10 billion in assets, the responsible agency must determine that the deal would not result in a monopoly or materially lessen competition. This creates a presumption in favor of smaller transactions.
- 3Applies across multiple statutes: The changes are made to the Federal Deposit Insurance Act (FDIA), the Bank Holding Company Act of 1956 (BHCA), and the Home Owners’ Loan Act (HOLA). Similar “competitive considerations” and asset-threshold rules are added in each statute for applicable transactions.
- 4Specific new provisions:
- 5- In FDIA section 18(c)(4) (as amended), adds a new category (D) requiring consideration of the listed entity types when compiling competitive-factor reports.
- 6- In BHCA section 3(c), adds an 8(i) and 9(i) focusing on competitive factors and the under-$10 billion asset rule.
- 7- In HOLA section 10(e)(2), adds an 8(8) and 9(9) mirroring the same competitive-factor framework for savings associations.
- 8Asset focus: The $10 billion asset threshold is a recurring trigger across the added provisions, influencing how competition is assessed and whether a deal can be blocked on competitive grounds.