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New Proposal In Congress Would Implement Ross Professor’s Ideas On Bank Mergers


A new bill in the U.S. Congress this week would strengthen standards for bank mergers in several ways advocated by Jeremy Kress, assistant professor of business law at the Ross School of Business. 

Kress, who is also a lawyer, worked with congressional staff members to draft the proposed legislation, based substantially on a recent paper he published. The bill would strengthen the legal standards under which federal regulators analyze applications for bank mergers in several different ways, largely paralleling the arguments in Kress’ paper.

The Bank Merger Review Modernization Act is sponsored by Sen. Elizabeth Warren, D-Mass., who is currently a candidate for the Democratic Party presidential nomination; Rep. Chuy Garcia, D-Ill.; Rep. Rashida Tlaib, D-Mich.; and Rep. Jan Schakowsky, D-Ill.

If approved and signed into law, the bill would:

  • Give the Consumer Financial Protection Bureau the authority to stop a bank merger if the banks have poor records on consumer protection.

  • Require that merging banks have records of consistent lending in low- and moderate-income communities, and that they develop formal plans to meet future credit needs of these communities.

  • Add new requirements for the merging banks to demonstrate their financial strength and stability.

  • Instruct regulators to consider specific effects on competition of any proposed bank merger.

  • Require more transparency in communications between banks and regulators.

  • Give citizens the ability to challenge merger approvals in federal court.

A press release from Warren about the bill quotes Kress as saying, “Lax oversight of bank mergers hurts consumers and endangers the financial system. This bill will restore rigor in the merger review process and ensure that banks may merge only when it is in the public interest.”

Kress has been making quite an impact in Congress this year. In July, U.S. Rep. Chuy Garcia quoted from an American Banker op-ed that Kress wrote on the Federal Reserve being a rubber-stamp for bank mergers, in front of the House Financial Services Committee on the proposed merger of SunTrust and BB&T. And, in March, Kress appeared in front of the  U.S. Senate’s Committee on Banking, Housing, and Urban Affairs to warn about the dangers of failing to properly regulate nonbank financial institutions.