ICBA Testifies on BofA/Fleet Merger
At a Federal Reserve hearing this week, ICBA expressed concerns about the continued concentration of bank assets in the United States and the impact the merger of FleetBoston Financial Corp. into Bank of America Corp. will have on consumers, small businesses and communities.
Testifying at the Federal Reserve Bank of Boston, Chris Cole, ICBA's regulatory counsel, said that large bank mergers often have an adverse impact on consumers and small businesses. "Unfortunately, the evidence shows that increased concentration in the banking industry has not benefited bank customers and has not had a positive effect on the convenience and needs of the communities served by the acquired banks," he said.
ICBA urged the Federal Reserve to examine closely the effect the merger will have on deposit pricing and fees in the New England area, and whether consumers and small businesses would be adversely impacted by the merger.
ICBA also suggested that large, national banks like Bank of America should be examined locally under the Community Reinvestment Act-as community banks are examined-instead of simply at the bank's main office to assess whether the national bank's CRA program is actually impacting the local community. ICBA urged that during the first two CRA exams following the merger, examiners review Bank of America's commitment to the New England community to see if the institution is indeed spending the money that it has pledged to spend and to compare its actual community spending with Fleet National Bank's programs prior to the merger.
ICBA said that Bank of America appears to be using a broad interpretation of the Riegle-Neal Interstate Banking and Branching Act of 1994 to comply with the act's prohibition against a bank controlling more than 10% of total insured U.S. deposits following a merger. Noting that consumers, small businesses and local communities often suffer when large, national banks merge and dominate the banking industry, Cole warned that "community banks will resist any attempt to increase the 10% cap imposed by the Riegle-Neal Act or to broaden the definition of 'deposit' under the Act."
A full copy of ICBA's testimony is posted at www.icba.org/pressroom.