Elizabeth Warren Writes To Janet Yellen, Regulators, Says Allowing Further Bank Mergers Will Be 'Dereliction Of Your Responsibilities'

In a letter to top government executives, including Treasury Secretary Janet Yellen, Sen. Elizabeth Warren (D-Mass.) has expressed her concerns about bank concentration and failures to curb the proliferation of lenders that are "too-big-to-fail."

Warren highlighted the failures of Silicon Valley Bank, Signature Bank and First Republic and said the banking crisis underscores the urgency of strengthening the merger review process and reversing the dangerous trend of consolidation among lenders.

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Apart from Yellen, the Senator's letter was also addressed to Assistant Attorney General Jonathan Kanter, Federal Deposit Investment Corporation Chair Martin Gruenberg, Acting Comptroller of the Currency Michael Hsu and Michael Barr, the Vice Chair for Supervision at the Board of Governors of the Federal Reserve System.

The banking crisis which unfolded in March with the failure of three banks led to a huge flight of deposits from mid-sized lenders to money market funds and big four banks. It dragged markets, sparked fears of credit crunch in an economy already battered by the Fed's consecutive rate hikes, and led to further consolidations in the industry.

Consolidation Impact: Warren pointed out that bank consolidation hurts consumers and leads to higher fees, lesser access to credit and job cuts. "Allowing additional bank consolidation would be a dereliction of your responsibilities, hurting American consumers and small businesses, betraying President Biden's commitment to promoting competition in the economy, and threatening the stability of the financial system and the economy," the senator said.

Warren also urged the executives to accelerate their work on updating the bank merger review guidelines which, she said, will "put an end to regulators' practice of rubber stamping merger applications and strengthen the standards under which mergers are considered."

The senator raised several questions and demanded responses from the executives by July 10. She asked about the timeline for the release of the updated merger review guidelines while demanding details regarding how agencies are building out the financial stability factor into a "rigorous framework."

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