H.R. 5262: Bank Competition Modernization Act

Summary of the Bank Competition Modernization Act

The Bank Competition Modernization Act seeks to update how certain banking transactions are evaluated, specifically focusing on acquisitions, mergers, consolidations, assumptions of liabilities, or transfers of assets involving financial institutions. Here are the key points of the bill:

Competitive Factors Considerations

The bill revises existing laws to require that when evaluating proposed financial transactions, specific competitive factors must be taken into account. This includes ensuring that any new entity formed as a result of these transactions does not have less than $10 billion in total assets. If it does:

• It will be deemed not to create a monopoly or contribute to monopoly behaviors in the banking sector.
• It will also not significantly reduce competition or restrain trade.

Consideration of Various Entities

When evaluating these transactions, the Attorney General and relevant banking agencies will consider a variety of financial institutions, including:

• Depository institutions: As defined under the Federal Deposit Insurance Act.
• Depository institution holding companies: Established under the same regulatory statute.
• Industrial loan companies: And similar entities defined under the Bank Holding Company Act.
• Entities under the Farm Credit Act: Organizations chartered for agricultural financing.
• Nonbank financial companies: As defined in the Financial Stability Act of 2010.
• Credit unions: Both insured and noninsured as defined by the Federal Credit Union Act.

Affects on Savings Associations

Additionally, the bill amends considerations for savings associations in similar ways, ensuring evaluations include the same types of financial entities listed above when reviewing their proposed transactions.

Implementation and Oversight

This bill aims to enhance the oversight of financial transactions and promote healthy competition among financial institutions, particularly focusing on smaller entities to safeguard their operations in a potentially consolidating industry.

Relevant Companies

None found