FRB Governor Bowman Speaks On Banking Competition

On September 28, Federal Reserve Board ("FRB") Governor Michelle Bowman spoke to the Community Banking Research Conference regarding the landscape for banking competition. Governor Bowman noted, as many have, that it is past time to update the bank merger framework, which was last updated in 1995. Governor Bowman said that in light of banking industry changes, "we need to change how we think about competition for banking products and services and modernize our approach to competitive analysis that promotes a healthy banking and financial system, supports consumer choice, and creates the right incentives for continued innovation."

Governor Bowman pointed out that the current guidelines for banking markets continue to be local banking markets, and define a market with a Herfindahl-Hirschman index ("HHI") of 1,800 or higher as concentrated, but Department of Justice ("DOJ") guidelines for horizontal mergers in other industries draw that line at the 2.500 level.