Richard Bowen

  • Home
  • About
  • Speaking
  • Videos
  • Media/Press
  • Testimonials
  • Blog
  • Contact
  • +1-214-604-5492

February 14, 2019 By Richard Bowen

So it’s about bank mergers, stupid!

Image: Bank Merger spelled out on calculator screen
Photo by Mike Lawrence, www.creditdebitpro.com

The world’s largest bank merger in more than a decade has been proposed, and poses concerns many are saying we need to pay attention to.

This proposed merger, with BB&T Corp purchasing SunTrust Banks Inc. for $28.2 billion combines two regional lending powerhouses and creates the sixth-largest U.S. retail bank in the U.S.

This is raising red flags on many levels with many key Democrats on Capitol Hill concerned that the deal merging the two bank giants will create another “too big to fail” bank.

Elizabeth Warren has commented, “The Board’s record of summarily approving mergers raises doubts about whether it will serve as a meaningful check on this consolidation that creates a new too big to fail bank and has the potential to hurt consumers.” She believes regulatory changes could “make matters even worse” and cited Yahoo Finance’s reporting on favorable conditions in the bank M&A space that could spur more industry consolidation in 2019.

Graphic: BBT&/Suntrust Merger would create sixth-largest bank in the U.S.
Used with permission of Yahoo Finance

Our present administration and its appointees at the Federal Reserve Board have eased regulations and signaled a more relaxed approach with the country’s biggest banks; so the merger would create a new bank, with more than $400 billion in assets.

“This will be a meaningful gauge of regulatory comfort with bank mergers,” said Isaac Boltansky, policy research director for Compass Point, an investment bank. For the biggest banks, he said, “my sense is that there is still a regulatory hesitancy.”

Many are concerned that this merger could signal the start of a wave of consolidations that leaves customers with fewer choices, regardless of the merging bank’s executives claim that the new institution would be able to save money by shutting side-by-side bank branches and cutting overhead costs, and thus investing in new products and services for customers.

“The Fed will look at how they have been operating in their communities, have they done the right thing to help all groups of people,” said Stephen Nielander, an adjunct lecturer at San Diego State University and a partner at financial services firm Cerity Partners. The Fed will also focus on the firms’ financial capability and management capability.

Image: Capitol Hill, Washington, D.C.
Photo by Andy Feliciotti on Unsplash

Jaret Seiberg, an expert on financial regulation at WRG Financial Services, said he expected the deal would win regulatory approval, although “It’s certain this will trigger some political criticism on Capitol Hill … We’re in uncharted waters with Rep. Maxine Waters, now at the helm of the House Financial Services Committee,” he said in a note to clients. “Waters might ask so many questions that it slows down the evaluation of the deal.”

The weakening of Dodd-Frank last year by raising the threshold for stricter capital requirements and regulatory scrutiny – from $50 billion in assets to $250 billion – caused me some concerns. In 2015, Jill Castilla, President and CEO of Citizen’s Bank of Edmond (Ok), says, “There is a lot of regulatory fatigue. I think there’s maybe a greater temptation to merge because of compliance costs and the economies of scale you’re able to gain when you combine.”

This merger raises the issues of the unfair competitive advantage that the too big to fail banks have.

The irony is that Dodd-Frank, in an attempt to reign in the abuses of the TBTF banks increased the costs of compliance for all banks, such that only the very largest of the TBTF have the scale to handle the increased compliance costs and make the required investment in new technology, products and services to have a competitive advantage in the marketplace. In fact, over the last decade, the largest of the TBTF banks have dramatically increased their market share, with J.P. Morgan Chase, Bank of America and Wells Fargo increasing their deposit base by over $2.5 trillion. Thus it is increasingly difficult to effectively argue against further banking mergers when it can be demonstrated that only the larger banks have the economies of scale which can accommodate both the higher costs of compliance as well as the technological investments to compete with the very largest banks in the market place.

IMG: Occupy protester holding a "Too big to fail is too big to allow" sign outside Bank of America.
Photo by David Shankbone [CC BY 3.0]
This consolidation trend will, in my opinion, make our economy even more dependent on the large banks, thus reinforcing the stranglehold that the large banks have over our economy.

This is why I and many others have called for the breakup of the large banks, followed by significant deregulation of banking to restore free competition and eliminate the increasing dependence our country has on maintaining the banking dominance at all costs.

If banks continue to consolidate, will the economy become too dependent on large banks thus guaranteeing we will have to bail them out once again if there is another financial crisis?

Are we moving toward another too big to fail crisis? Even as the Wall Street Journal notes, “The real worry is that bank consolidation will make the financial system less resilient during a panic.”

 

Richard Bowen on WRVO, Syracuse University
Should the Big Banks Be Nervous?

Tagged With: #2big2fail, Financial Crisis, tbtf, Too Big to Fail

Ethics on your mind? Subscribe to my ezine to get my latest article delivered right to your inbox. Click Here to Subscribe

Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.

Related Posts

  • The Whistleblower Newsroom; Is This a Conspiracy?The Whistleblower Newsroom; Is This a Conspiracy?
  • The Con Docuseries More Widely AvailableThe Con Docuseries More Widely Available
  • LA VERDAD INTERNACIONAL… │The Whistleblowers and JusticeLA VERDAD INTERNACIONAL… │The Whistleblowers and Justice
  • More Deregulation? The Caution Flags are WavingMore Deregulation? The Caution Flags are Waving

What People Are Saying About Richard M. Bowen

William D. Cohan"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst."

~ William D. Cohan, NY Times Best Selling Author
2017-06-30T10:08:59-05:00
"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst." ~ William D. Cohan, NY Times Best Selling Author
https://richardmbowen.com/testimonials/2556/

Eileen McDonnell"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger."

~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
2015-02-13T19:51:19-06:00
"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger." ~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
https://richardmbowen.com/testimonials/711/

Ben Stein"Richard Bowen, you are a star and a hero."

~ Ben Stein, Economist and Political Commentator
2015-02-13T19:50:26-06:00
"Richard Bowen, you are a star and a hero." ~ Ben Stein, Economist and Political Commentator
https://richardmbowen.com/testimonials/712/

Jim Farrell"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership."

~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
2014-12-28T19:48:17-06:00
"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership." ~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
https://richardmbowen.com/testimonials/532/

Dennis McCuistion"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years."

~ Dennis McCuistion, Host of the McCuistion TV program
2014-12-28T19:48:06-06:00
"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years." ~ Dennis McCuistion, Host of the McCuistion TV program
https://richardmbowen.com/testimonials/533/

Betty Garrett"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!"

~ Betty Garrett, Garrett Speakers International
2014-12-28T19:47:50-06:00
"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!" ~ Betty Garrett, Garrett Speakers International
https://richardmbowen.com/testimonials/531/

fred-timmons"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences."

~ Fred Timmons, Chairman of The Texas Society of CPA's
2014-12-28T19:47:22-06:00
"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences." ~ Fred Timmons, Chairman of The Texas Society of CPA's
https://richardmbowen.com/testimonials/530/

Presentation Topics

Playing for High Stakes: The Principles and Practice of Ethical Leadership

Dark Citi: The Story of a Whistleblower

Want to Hire Richard?

Watch Richard

See What Clients are Saying

About Richard

Recent Posts

  • What should you do before you report wrongdoing?
  • Peace and happiness this holiday season
  • Wishing you a warm and happy Thanksgiving
  • Speaking at the University of North Texas
  • Resisting Corporate and Government Corruption

Categories

  • Business Ethics
  • Congress
  • Corporate Debt
  • Corruption
  • Ethical Leadership
  • Financial Crime
  • Financial Crisis
  • Financial Crisis of 2008
  • Fraud
  • Holiday
  • International
  • Mortgage Lending
  • Mortgage Meltdown
  • Relationships
  • Resources
  • Speaking
  • Texas Politics
  • The Fed
  • Too Big To Fail
  • Uncategorized
  • Updates
  • Wall Street
  • Whistle Blowers

About Richard

Now an ethical leadership speaker, Richard Bowen was Citigroup's Business Chief Underwriter during the housing bubble.

Read more

Connect with Richard

  Facebook   Twitter   Linked   YouTube

Contact Us

Phone: +1-214-604-5492

Email: Richard@RichardMBowen.com

Contact Richard

Copyright 2021© 2023 · Richard M. Bowen | ALL RIGHTS RESERVED.

X
Sign up to receive my blog posts via email!
Subscribe >>