Waters Writes to Prudential Regulators on Proposed SunTrust/BB&T Merger

“…[t]he proposed merger warrants serious scrutiny from Congress,” wrote Chairwoman Waters. “This is especially true given the rubber-stamping bank merger applications receive from regulators as demonstrated by the recent data regarding the Federal Reserve’s reviews. As the Committee intends to conduct thorough oversight of this merger, including holding our own public hearings on the matter, I respectfully ask that your agencies defer any final decisions on the merger application until after the Committee completes a full and thorough review of the proposed merger.”

In the letter, the Chairwoman also expresses concerns about the impact this merger will have on bank employees and rural and underserved markets, and urges regulators to increase their efforts to hear a wide range of stakeholder perspectives by holding additional public hearings in other states affected by the merger.

In February, following the announcement that SunTrust and BB&T plan to merge, Chairwoman Waters called the proposed merger a, “direct consequence of the deregulatory agenda that Trump and Congressional Republicans have advanced,” and she questioned the public benefit it would have for consumers.

See her full statement here and the full text of her letter to prudential regulators below.

The Honorable Jerome H. Powell
Chairman
Board of Governors of the Federal Reserve System
20th Street & Constitution Avenue, NW
Washington, DC 20551

The Honorable Jelena McWilliams
Chairman
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

Dear Chairman Powell and Chairman McWilliams:

I write to express my concerns with the proposed merger between BB&T and SunTrust. The proposed merger raises many questions and deserves serious examination from banking regulators, Congress and the public to determine its impact and whether it would create a public benefit for consumers. I urge your agencies to provide a high degree of scrutiny of this proposed merger of what could become the sixth largest bank in the United States. This level of review is critical, even if it means taking more time to conduct the appropriate due diligence and ensure all affected stakeholders have an opportunity to be heard. To that end, while I appreciate the Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation’s (FDIC) efforts in conducting two public hearings in Charlotte, North Carolina, and Atlanta, Georgia, as well as extending the public comment period,[1] your agencies should hold additional public hearings in other states that would be affected by the proposed merger to ensure the agencies have a wide range of perspectives before making a decision on the merger application.

According to SunTrust, they currently have branches in Alabama, Arkansas, District of Columbia, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, and Virginia.[2] The bank provides a range of products and services, including commercial banking, consumer banking, consumer lending (HELOC, credit card), private wealth management and retail mortgage to consumers in these states. The bank also provides products and services across the country, including corporate and investment banking, commercial real estate, consumer lending, specialty private wealth management, and correspondent mortgage.[3] As of December 31, 2018, SunTrust had more than $215 billion in total assets.[4] 

According to BB&T, they currently have a presence through branches and ATMs in Alabama, District of Columbia, Florida, Georgia, Indiana, Kentucky, Maryland, North Carolina, New Jersey, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia.[5] BB&T has several national businesses, such as insurance and corporate banking, as well as traditional retail and consumer finance products and services it offers its customers.[6] As of December 31, 2018, BB&T had more than $225 billion in total assets.[7]

The proposed merger is simply not between two small banks located in Georgia and North Carolina, but rather between two of our largest banks with a presence in numerous states and products and services being offered across the country. In fact, if the merger is approved, it would create the largest bank the FDIC has ever supervised as the primary Federal regulator. Certainly, two public hearings are insufficient for the agencies to fully understand what the ramifications will be for millions of Americans.

In addition, the proposed merger was announced less than a year following the enactment of S. 2155 by the last Congress, a bill that I warned was a broader deregulatory giveaway to the largest banks instead of being focused on sensible improvements for community banks, as the proponents of the bill argued. Experts noted the legislation would likely incentivize bank mergers and accelerate industry consolidation,[8] making it more difficult for community banks to compete on a level playing field.[9]   

There are also concerns that have been raised about regulators rubber-stamping prior merger and acquisition applications. For example, based on data provided by the Federal Reserve,[10] from January 1, 2006 through December 31, 2017, over 3,800 merger applications were submitted to the agency. During this eleven-year period, however, the Federal Reserve did not reject any merger application.

There are also many questions about how this proposed merger could specifically impact employees, branches, consumers and communities. For example, it has been reported that the banks will cut costs by closing branches, and that roughly 740 of their branches are within 2 miles of each other. Lesley Weaver, attorney for the National Black Farmers Association, explained at the first public hearing that branch closures in rural areas would hurt black farmers, noting, “Increased market concentration leads to worse economic terms for bank customers.”[11]   

Given these concerns, please detail your reaction to Ms. Weaver’s comment and how this proposed merger could adversely impact consumers’ access to affordable financial products and services; possible Community Reinvestment Act implications within rural and underserved markets; and exploring how both agencies are evaluating adequate remedies for employees affected by lay-offs. Please also schedule additional public hearings in other states that would be affected by this merger to hear from a larger group of stakeholders given its significant potential impact.

Finally, the proposed merger warrants serious scrutiny from Congress. This is especially true given the rubber-stamping bank merger applications receive from regulators as demonstrated by the recent data regarding the Federal Reserve’s reviews. As the Committee intends to conduct thorough oversight of this merger, including holding our own public hearings on the matter, I respectfully ask that your agencies defer any final decisions on the merger application until after the Committee completes a full and thorough review of the proposed merger.

Thank you for your attention to this urgent matter. I look forward to your prompt written response by May 15, 2019.

Sincerely,
MAXINE WATERS
Chairwoman

cc: The Honorable Patrick McHenry, Ranking Member

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1) Federal Reserve, “Agencies announce two public meetings on merger of BB&T and SunTrust; public comment period extended,” (Mar. 14, 2019), available at: https://www.federalreserve.gov/newsevents/pressreleases/other20190314a.htm.
2) https://www.suntrust.com/branch.
3) SunTrust, Annual Report 2018, available at: http://s2.q4cdn.com/438932305/files/doc_financials/2018/annual/SunTrust-2018-Annual-Report.pdf.
4) https://www.ffiec.gov/nicpubweb/nicweb/hcsgreaterthan10b.aspx. 
5) https://www.bbt.com/locator/search.html.
6) BB&T, Annual Report 2018, available at: https://bbt.investorroom.com/download/Annual+Report+2018.pdf.
7) Supra note 4.
8) Michelle Fox, “Bank mergers will 'absolutely' accelerate thanks to regulation rewrite, predicts analyst Mike Mayo,” CNBC (March 16, 2018), available at: https://www.cnbc.com/2018/03/16/bank-mergers-will-absolutely-accelerate-predicts-analyst-mike-mayo.html.
9) David Dayen, “Bill Aimed at Saving Community Banks is Already Killing Them,” The Intercept (May 16, 2018), available at: https://theintercept.com/2018/05/16/wall-street-bank-regulation-bill/.
10) Federal Reserve Chair Jerome Powell Response Letter to Sen.Warren related to Bank Merger Applications (May 10, 2018), available at: https://www.warren.senate.gov/imo/media/doc/Powell%20Response%20re%20Mergers.pdf.
11) Charlotte Observer, “BB&T, SunTrust merger plan for Charlotte draws mixed reaction from the public,” Charlotte Observer (Apr. 25, 2019), available at: https://www.charlotteobserver.com/news/business/banking/article229593849.html.

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