To prohibit the use of certain concentration limit exceptions with respect to mergers involving a failed bank unless the applicable agency determines such use is necessary to prevent significant economic disruption or significant adverse effects on financial stability, and for other purposes.
Legislative Progress
IntroducedMr. Lynch introduced the following bill; which was referred to …
Summary
What This Bill Does
The Failing Bank Acquisition Fairness Act restricts how the largest banks in America can acquire failing banks. Currently, when a bank fails, mega-banks like JPMorgan Chase can often acquire them by getting regulators to waive deposit concentration limits. This bill makes those waivers much harder to obtain, requiring regulators to prove with "clear and convincing evidence" that allowing a mega-bank acquisition is the only way to prevent a financial crisis, and that no smaller bank submitted a qualified bid.
Who Benefits and How
Small and mid-sized banks gain significantly increased opportunities to acquire failed banks. Currently, the largest banks often outbid community and regional banks for failed institutions. Under this bill, those mega-banks would be excluded from bidding unless their acquisition is truly necessary for financial stability. Community banks, regional banks, and credit unions would face less competition from banking giants when failed institutions become available. The Deposit Insurance Fund may also benefit from more competitive bidding.
Who Bears the Burden and How
The four largest U.S. banks (JPMorgan Chase, Bank of America, Wells Fargo, and Citibank) would lose a significant expansion pathway. They would be effectively barred from acquiring most failed banks unless extraordinary circumstances apply. Federal banking regulators (the Federal Reserve, FDIC, and OCC) face new reporting requirements: they must submit detailed reports to Congress within 30 days explaining any waiver they grant, including what alternative bids they considered and why they were rejected. These reports must also be made public.
Key Provisions
- Requires regulators to show "clear and convincing evidence" that waiving concentration limits is necessary to prevent significant economic disruption before allowing mega-bank acquisitions
- Creates a new "qualified bid" definition requiring acquiring banks to be well-capitalized and well-managed
- Prohibits the FDIC from counting bids that would violate concentration limits in its "least cost" resolution calculations
- Mandates congressional reporting within 30 days when waivers are granted, including justification and description of alternative bids considered
- Requires public disclosure of waiver justification reports (with redactions for confidential information)
Evidence Chain:
This summary is derived from the structured analysis below. See "Detailed Analysis" for per-title beneficiaries/burden bearers with clause-level evidence links.
Primary Purpose
Restricts the use of concentration limit waivers in failed bank acquisitions by requiring regulators to demonstrate that waiving deposit concentration limits is necessary to prevent significant economic disruption or adverse financial stability effects, and that no qualified alternative bids exist.
Policy Domains
Legislative Strategy
"Limit 'too big to fail' dynamics by restricting mega-bank acquisitions of failed banks unless absolutely necessary, promoting competition by requiring consideration of qualified bids from smaller banks first"
Likely Beneficiaries
- Small and mid-sized banks (increased opportunity to acquire failed banks)
- Community banks and regional banks (reduced competitive disadvantage)
- Deposit Insurance Fund (better resolution outcomes)
- Financial system stability (reduced concentration risk)
Likely Burden Bearers
- Large systemically important banks (JPMorgan Chase, Bank of America, etc.) - reduced ability to acquire failed banks using concentration waivers
- Federal Reserve Board (increased evidentiary burden for approving waivers)
- FDIC (new reporting requirements, more complex resolution process)
- OCC (new reporting requirements)
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_board"
- → Board of Governors of the Federal Reserve System
- "the_corporation"
- → Federal Deposit Insurance Corporation (FDIC)
- "responsible_agency"
- → The banking regulator with authority over the specific institution
- "the_board"
- → Board of Governors of the Federal Reserve System
- "waiving_agency"
- → The agency that grants the concentration limit waiver
- "the_comptroller"
- → Comptroller of the Currency (OCC)
- "the_corporation"
- → Federal Deposit Insurance Corporation (FDIC)
- "the_corporation"
- → Federal Deposit Insurance Corporation (FDIC)
Key Definitions
Terms defined in this bill
An application, proposed application, or bid from a company where: (I) the company, any affiliate insured depository institution, and any affiliate depository institution holding company is well capitalized and well managed as of the bid date; and (II) upon consummation of the transaction, the resulting insured depository institution is well capitalized
For insured depository institutions: as defined in section 38(b) of FDIA; for bank holding companies: as defined in section 2(o)(1)(B) of BHCA; for S&L holding companies: as defined in 12 CFR 238.2; for other companies: maintaining equity capital commensurate with a well capitalized insured depository institution as determined by FDIC
Has the meaning given in section 2(o)(9) of the Bank Holding Company Act of 1956
A bank or insured depository institution that has failed or is at risk of imminent failure, triggering FDIC resolution authority
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology