By The Financial District
Oct 15, 20222 min
Key financial regulators on Friday (Saturday, Oct. 15, 2022, in Manila) approved US Bank’s $8 billion acquisition of Japanese financial titan MUFG’s Union Bank franchise, clearing big regulatory hurdles for a deal that will push US Bank closer to the size of Wall Street’s mega banks, Ken Sweet reported for the Associated Press (AP).
Photo Insert: The US Bank Tower
But in reaching those approvals, both the Office of the Comptroller of the Currency (OCC) and the Federal Reserve expressed concern about the recent growth of so-called “super regional” banks like US Bank, Trust, and PNC Financial.
The OCC stipulated in its approval that U.S. Bank must find ways to quickly and easily sell off parts its business in cases of severe economic distress.
“In reaching this decision, the OCC carefully considered the effect of the US Bank and MUFG Union Bank merger on communities, the banking industry, and the US financial system,” said Acting Comptroller of the Currency Michael J. Hsu.
“The OCC also took into account ... how best to ensure that large banks do not become the next class of too big to fail institutions.”
Meanwhile, Fed Governors said the central bank should consider new regulations for these super-regional banks that would recognize their recent growth in size and what risks they may now pose to the overall financial system.
The nation’s biggest Wall Street banks, technically known as globally systemically important banks, became some of the most strictly regulated institutions following the 2008 financial crisis.
They are required to have so-called “living wills” to show how they would best unwind their businesses in case of bankruptcy.
While the Fed may not want to go as far as it did in putting guardrails on the mega banks like JPMorgan, it signaled that the super-regional banks are a growing concern.