The Bank Competition Modernization Act – which passed the House Financial Services Committee on September 16 – would require certain competitive factors to be considered when evaluating proposed mergers and acquisitions involving financial institutions. In a new insight, Director of Competition Policy Fred Ashton walks through where the bill would improve the merger process and where it falls short.

An excerpt:

The Bank Competition Modernization Act would update bank merger review laws to better reflect the competitive environment of the financial industry. The new provisions promise to reduce the regulatory burden on smaller firms while increasing merger review efficiency for certain transactions.

Yet the bill’s safe harbor provision would establish two sets of rules that could distort market incentives and lead to inefficient outcomes, resulting in higher prices and fewer choices for consumers.

Read the analysis.