FRB Governor Cautions Against Bank Merger Delays Becoming "New Normal"

Federal Reserve Board Governor Michelle W. Bowman said that increasing delays in the review and processing of bank merger applications may result in increased operational risk, employee retention issues, reputational risk and the additional costs associated with running two institutions in parallel over an extended period of time.

In remarks before the American Bankers Association Community Banking Conference, Ms. Bowman said that there is a need for clearer guidance on the information required in bank merger applications to (i) ensure that applicants understand the expectations of regulators and (ii) avoid incomplete or inaccurate submissions. Ms. Bowman also highlighted the benefits of transparency between the regulator and applicant, especially when new supervisory issues arise and require remediation for application approval.

Additionally, Ms. Bowman spoke of the importance of "tailoring" regulation and supervision to bank size. She said that such an approach allows for an "appropriate balance" for each relevant banking tier and helps support the establishment of requirements that "address risks, including financial stability risks, while recognizing the costs of over-regulation."