House subcommittee pushes faster merger reviews, eased capital rules to revive de novo banks

At a hearing of the House Financial Services Subcommittee on Financial Institutions, members and witnesses discussed legislation and regulatory changes aimed at speeding bank merger reviews and making it easier to form de novo banks.

The panel’s chair framed the session as an effort to “enhance competition” by removing delays and uncertainty from merger review and by encouraging new bank entry. “The current system for reviewing bank mergers is too slow, too uncertain, and too costly,” the chair said, and introduced the Bank Failure Prevention Act, which would impose a statutory “shot clock” on agency merger reviews. He also said he supports a congressional review resolution to overturn a prior merger rule recently rescinded by Acting Comptroller Rodney Hood.

Why it matters: witnesses and members said lengthy regulatory timelines, higher capital requirements and inconsistent agency guidance have contributed to a steep decline in new bank charters and discourage transactions that could preserve community banking services. Several witnesses argued that fewer new entrants and drawn‑out merger reviews reduce competition, drive customers to nonbank…