Home / Daily Dose / Powell Promises ‘Thorough’ Review of BB&T, SunTrust Merger
Print This Post Print This Post

Powell Promises ‘Thorough’ Review of BB&T, SunTrust Merger

Jerome Powell, Chairman of the Federal Reserve told the Senate Banking Committee on Tuesday that the Fed would carry out "thorough and transparent" review of the recent BB&T/SunTrust merger before giving it a go-ahead. On Wednesday, during his semi-annual testimony before the House Financial Services Committee, Powell explained, just what that review would entail.

Earlier in February, BB&T and SunTrust announced a merger valued at $66 billion that would create the sixth-largest U.S. bank based on assets and deposits, making it the biggest bank deal since the 2007-2009 financial crisis. The merger, which is expected to get completed by the end of the fourth quarter will create an entity whose footprint will cover the East Coast with new corporate headquarters in Charlotte, North Carolina. In terms of its revenue from the mortgage business, the banks projected the combined fee income of the merged entity at $88 billion with 7 percent coming in through residential mortgage banking.

Answering a question on the criteria for evaluating bank merger applications, he said that a section of law under the Federal Reserve Act laid out plenty of guidance and detail on the issue. Some of the factors that the Fed considered while evaluating such mergers included, competitive and banking community factors, managerial resources, compliance with consumer fair lending laws and the Community Reinvestment Act (CRA), as well as the combined financials of both the companies.

"We also invite public comment. We have a pretty thoroughly worked out process to work through the merger and then we make a decision," Powell told the committee while pointing out that the number of mergers between banks was the lowest "in at least 15 years" in 2018.

Answering a question on how the Fed would look at the BB&T/SunTrust merger during his testimony before the Senate Banking Committee on Tuesday, Powell had said that the process for evaluation was set forth in great detail. "We will go through that process carefully, fairly, thoroughly, and with a lot of transparency," he said answering a question on the merger from Ranking Member Sen. Sherrod Brown while acknowledging that the Fed had still not received the merger application.

He also replied to a question on how the Fed would evaluate the merger based on the banks' individual CRA ratings given by the Office of the Comptroller of Currency (OCC). "We haven't changed our policy [on studying recent and past CRA violations] and we do consider the law under convenience and needs of the communities served and that includes consumer compliance and fair lending records and the record of performance under the CRA," Powell said.

Additionally, he said that the Fed would also consider public comments and the full range of information given to them. "Any information that's presented to us, we'll also consider," he said.

About Author: Radhika Ojha

Radhika Ojha is an independent writer and copy-editor, and a reporter for DS News. She is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her masters degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha, also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Houston, Texas.

Check Also

Federal Reserve Holds Rates Steady Moving Into the New Year

The Federal Reserve’s Federal Open Market Committee again chose that no action is better than changing rates as the economy begins to stabilize.