Dive Brief:
- House Financial Services Committee Chair French Hill, R-AR, and 14 other Republican lawmakers are asking the Federal Reserve to make “additional progress” in shortening the time it takes to process M&A applications.
- In a Tuesday letter, the lawmakers urged Fed Vice Chair for Supervision Michelle Bowman to conduct “a review of long-pending applications focused on identifying and removing obstacles to final action.”
- They asked Bowman to detail the Fed’s current and planned initiatives geared toward improving M&A application processing, including anticipated milestones. They also encouraged the central bank to expand its use of delegated authority to streamline the review process further, rather than requiring action by vote of the board.
Dive Insight:
Congressional Republicans noted that progress had been made to shorten application processing times, but called for further action to address sources of delay, such as the receipt of adverse comments on potential deals.
In a March report, the Fed’s Office of Inspector General said M&A application processing at the central bank has slowed and data gaps are inhibiting the Fed’s aim to boost efficiency and timeliness. At that point, the Fed had already made some recommended changes – after facing “internal and external pressure” – including updates to its FedEZFile system, which allows for application status tracking.
Several factors add to application processing delays, Fed officials told the OIG. Sometimes the Fed receives incomplete or untimely responses to requests for more information from applicants, the official said. Consultation with other regulatory agencies takes time, as does conducting background checks and internal reviews to determine final action, they said. Sometimes, complex applications may pose policy issues, they said, and the consideration of adverse public comments takes time.
Legislators called for “swift implementation” of OIG recommendations that the Fed agreed to in March, such as issuing guidance and holding training on FedEZFile updates, and developing dashboards and drafting reports leaning on the updated data fields.
The OIG encouraged the Fed to establish a process that identifies themes or patterns across applications, to spot pain points. The office also asked the Fed to evaluate whether existing time targets are sufficient or more targets should be set, and to assess whether more information should be collected in FedEZFile to bolster the application monitoring process.
In their Tuesday letter to Bowman, lawmakers contended that mergers or acquisitions posing concern tend to be flagged before the application process.
“Most proposals formally presented to regulators are the survivors of a substantial vetting process between motivated private parties while problematic proposals are abandoned before such formal presentation,” they wrote.
Delayed application processing can also hamper the value of the acquisition target and create uncertainty for bank customers and employees, the lawmakers said, making it “even more important that the Federal banking agencies act swiftly on these applications.”
Under the second Trump administration, bank M&A activity has soared, egged on by stronger probability of a bank deal gaining regulatory approval, and far shorter wait times to receive a decision, analysts have said.
Additionally, the Justice Department’s antitrust division announced changes Thursday intended to streamline merger reviews, as part of its “commitment to reducing the burden and costs on merging parties,” without compromising its ability to investigate deals that pose concern, the DOJ said.
Facts Only
* House Financial Services Committee Chair French Hill and 14 other Republican lawmakers asked the Federal Reserve to make additional progress in shortening M&A application processing time.
* Lawmakers urged Fed Vice Chair for Supervision Michelle Bowman to conduct a review of long-pending applications focusing on identifying and removing obstacles to final action.
* Lawmakers asked Bowman to detail the Federal Reserve’s current and planned initiatives for improving M&A application processing, including anticipated milestones.
* The lawmakers encouraged the central bank to expand delegated authority to streamline the review process without requiring a board vote.
* The Fed’s Office of Inspector General reported that M&A application processing at the central bank has slowed and data gaps are inhibiting efficiency goals.
* Delays in processing can result from receiving incomplete or untimely responses, consultation with other regulatory agencies, background checks, internal reviews, and consideration of adverse public comments.
* Lawmakers called for swift implementation of OIG recommendations regarding guidance, training on FedEZFile updates, and developing dashboards based on updated data fields.
* The Office of Inspector General recommended establishing a process to identify themes across applications and evaluate if existing time targets are sufficient.
* Lawmakers contended that mergers or acquisitions posing concerns are often flagged before the formal application process occurs.
* Bank M&A activity has reportedly soared under the second Trump administration, with analysts noting shorter wait times for decisions.
Executive Summary
Republican lawmakers from the House Financial Services Committee are pressing the Federal Reserve to accelerate progress in shortening the time required to process mergers and acquisitions (M&A) applications. They requested Fed Vice Chair for Supervision Michelle Bowman to review long-pending applications specifically to identify and remove obstacles to final action, and to detail current and planned initiatives for improving M&A processing, including milestones. Lawmakers also urged the central bank to expand its use of delegated authority to streamline the review process by reducing reliance on board votes.
The context indicates that while progress has been made in shortening application times, delays persist due to various factors. The Fed's Office of Inspector General reported that M&A application processing has slowed, and data gaps impede efficiency goals. Delays are attributed to receiving incomplete or untimely responses from applicants, the time required for consultation with other regulatory agencies, background checks, internal reviews, and the time needed to consider adverse public comments on deals.
Legislators advocated for the swift implementation of recommendations made by the OIG, such as issuing guidance and training on FedEZFile updates, and developing data dashboards based on updated information. Furthermore, lawmakers noted that delayed processing can negatively affect acquisition target value and create uncertainty for financial customers and employees, emphasizing the need for Federal banking agencies to act quickly. This context is set against a backdrop where bank M&A activity has recently increased, and the Justice Department has also announced changes to streamline merger reviews.
Full Take
The dynamic presented here reflects a tension between regulatory efficiency and due diligence in complex financial transactions. The push from lawmakers targets the procedural bottlenecks within the Federal Reserve’s review mechanism, seeking to impose greater accountability and speed on an already complex system where various administrative steps—information gathering, consultation, background checks, and public comment consideration—inherently introduce friction. The core tension is between optimizing regulatory timelines and ensuring comprehensive, fair scrutiny of potentially high-stakes deals.
The OIG's findings highlight that the inefficiency stems not just from processing speed, but from the necessary deliberative steps involved in assessing risk and context. This suggests a structural challenge: how can an institution balance its mandate for timely action with its responsibility to conduct thorough, multi-faceted reviews? The suggestion by regulators to establish thematic analysis of applications points toward an opportunity to shift from managing individual case timelines to proactively identifying systemic pain points that cause delays.
The observation regarding the nature of proposed deals—where problematic proposals are sometimes abandoned before formal presentation—suggests a fundamental asymmetry: private parties initiate the process with selective information, yet regulatory bodies must then absorb and reconcile incomplete data while striving for mandated velocity. This dynamic implies that external pressures, such as soaring M&A activity and shifts in antitrust review processes, place additional strain on this system. The ultimate implication is whether incremental procedural adjustments are sufficient to overcome deeper systemic inertia or if a fundamental re-evaluation of the relationship between regulatory oversight and operational speed is required.
Bridge Questions: If the goal is true efficiency, what specific data points from application tracking (like those in FedEZFile) are most crucial for identifying systemic delays rather than just tracking individual case statuses? How can delegated authority be structured to allow for necessary consultation without compromising the thoroughness of risk assessment? What long-term structural changes are needed to ensure that the pursuit of speed does not inadvertently bypass critical risk identification mechanisms?
Sentinel — Human
The article functions as a standard legislative briefing that synthesizes official regulatory findings with political demands regarding M&A processing efficiency.