Bank Merger and Acquisition Policy Changes: The Opportunity Is Now

Under the current administration, both the bank regulators and the DOJ quickly acted to rescind Biden-era guidance on bank merger review. These actions restored the formal status quo regarding the bank merger approval process, but more importantly signaled that the administration welcomes new bank merger activity. Additionally, in March 2025, Treasury Secretary Scott Bessent criticized the prior administration's regulatory "mission drift," stating that "[p]roductive and synergistic mergers are often slowed due to immaterial supervisory issues." He called for a refocus of financial regulation on bank safety and soundness, affordability of goods and services, and facilitating economic growth.

Regulatory Actions

Policy statements in 2024 from the Office of the Comptroller of the Currency (the "OCC") and the Federal Deposit Insurance Corporation (the "FDIC") expressed the agencies' process for heightened scrutiny of bank M&A and, in effect, put a stop to most bank merger activity. However, in May 2025, the FDIC rescinded its 2024 policy statement on bank merger review and instead reinstated familiar guidance from 1998. The OCC also issued an interim final rule that rescinded the 2024 policy statement and reinstated regulatory provisions allowing for automatic expedited processing for specified eligible M&A. President Trump subsequently signed a joint resolution under the Congressional Review Act, which, among other things, prevents an agency from reissuing a substantially similar rule, further cementing the shift in regulatory approach. With the FDIC and OCC reinstating their pre-2024 policies, applicants once again face a more predictable merger approval process and, for qualifying transactions, a 15-day pathway for applications to be deemed approved is once again available.

The Federal Reserve, for its part, has not issued new M&A regulations or policy statements (and it is responsible for reviewing and approving applications involving both state member banks and bank holding companies). However, in April 2025, the Federal Reserve (along with the OCC) approved Capital One's merger with Discover, signaling a willingness to clear large deals where competitive, managerial, and Community Reinvestment Act ("CRA") factors can be adequately addressed. This decision is another signal that the agencies are open to large-scale mergers.

Industry Effects

Since the start of 2025, deal activity has accelerated in the marketplace, and some recent reports of resurgent first-quarter dealmaking indicate merger activity could return to pre-2021 levels.

To succeed in the current environment, banks must demonstrate robust risk management processes as well as alignment with agency priorities. Banks should focus on: (i) managerial, CRA, and systemic risk factors; (ii) strong compliance with anti-money laundering ("AML") and sanctions rules; (iii) a strong record aligning with agency priorities regarding fair access and debanking; and (iv) compliance with antidiscrimination law. Besides varied compliance measures, banks should also ensure that proposed acquisitions meet the requirements for antitrust-related approval issues, both from the DOJ and from the banking agencies.

Current Priorities

Fair Access. Fair access and debanking issues could also pose a major obstacle to potential bank mergers. Early into his administration, President Trump gave his agencies the mandate to "protec[t] and promo[te] fair and open access to banking services" and the banking agencies have taken steps to further that directive, aiming to ensure that banks provide services based on neutral, risk-based criteria rather than political, religious, or other nonfinancial factors. Banks seeking merger approvals should prioritize documented, risk-based customer onboarding policies that tie any decision not to provide banking services to customers on a group basis to objective, legal criteria. The regulatory environment has shifted decisively against the use of reputational risk as a standalone justification for account closures or refusals. Institutions should be prepared for increased scrutiny of past account closures or refusals and the need to justify decisions with clear, objective evidence, as both federal and state regulators may investigate alleged discriminatory practices.

Additionally, equal-opportunity compliance remains critical for successful bank M&A approval. Executive orders curtailing mandatory diversity, equity, and inclusion metrics do not relieve banks of their federal antidiscrimination duties. Antidiscrimination law has been recently clarified in the Supreme Court's ruling in Ames v. Ohio Department of Youth Services, 605 U.S. ___ (2025), which applied the same standard for proving discrimination to a heterosexual woman as to someone with additional background circumstances. This case demonstrates the need for strictly merit-based hiring, promotion, and procurement practices by banks. Banks not in compliance with Title VII and other applicable laws risk litigation and regulatory investigations that could derail any potential merger or acquisition.

Antitrust Concerns. Antitrust and competition considerations now implicate additional factors beyond traditional measures of market concentration.

Unlike the banking agencies, which recently reverted to 1990s-era guidance, the DOJ still operates under the 2023 Merger Guidelines after withdrawing from the 1995 Bank Merger Guidelines. Under the 2023 Merger Guidelines, agencies apply a more stringent Herfindahl-Hirschman Index ("HHI") threshold: Mergers are presumed to be anticompetitive if there is a change in HHI greater than 100 points, rather than the previous baseline of 200 points, which is currently used by the OCC and FDIC. Besides imposing stricter HHI limits, the newer approach also focuses more on "market realities," encompassing a wider range of factors, including the impact of a potential bank merger on rural and underserved consumers. The 2023 Merger Guidelines indicate that the DOJ will evaluate not only deposit concentration but also product-specific overlaps, pricing, network effects, and customer service; the guidelines allow the DOJ to challenge transactions on qualitative grounds even if traditional market share thresholds are not exceeded. Banks should seek to harmonize with the current administration's interests in certain community needs. Dominance in a particular market by a select number of large firms may be disfavored if lower-income consumers cannot readily access products or services that are available elsewhere. Anticipated branch closures and job losses within banks upon a merger or acquisition may also affect M&A approvals. Such additional qualitative considerations suggest more nuanced reviews by the DOJ that could delay deal activity if banks do not anticipate certain key priorities.

Banking agencies also weigh anticompetitive effects during the M&A approval process. Recently, the agencies have reinstated policies that resurrect traditional HHI thresholds to measure market concentration. The FDIC and OCC have recently revised their M&A review policies, with the FDIC explicitly reserving the right to consider broader competitive dynamics, including nontraditional business lines and regional or national market effects. The evolving landscape underscores the importance of preemptive competitive analysis, thorough due diligence, robust documentation, and proactive communication with all relevant agencies to navigate the M&A approval process.

AML and Sanctions. AML and sanctions compliance remains critical to successful merger review. Executive orders early in the Trump administration designated additional terrorist organizations and therefore created additional obligations for banks for AML and sanctions compliance. And ever-increasing sanctions targets highlight the need for transaction monitoring, regular risk assessments, and effective controls. Banks with deficiencies in their AML and sanctions compliance programs may find that these can impair their ability to gain approvals for combinations, particularly if the deficiencies relate to crimes the administration has prioritized for enforcement, such as fentanyl trafficking, human trafficking, and money laundering by Mexican drug cartels.