Magazine article American Banker

Antitrust Act Hampers Fed's Attempt to Speed Procedure on Mergers

Magazine article American Banker

Antitrust Act Hampers Fed's Attempt to Speed Procedure on Mergers

Article excerpt

Providing regulatory relief is no easy task.

Just ask the Federal Reserve Board. The agency thought it could streamline its applications process to make it easier for bank holding companies to acquire some nonbanking businesses. Instead, it may end up making some mergers more costly and time-consuming.

The trouble centers on the Fed's proposed changes to Regulation Y, which would allow well-capitalized holding companies to skip the approval process altogether for some transactions. Instead, they would simply give 12 days' notice before acquiring many nonbanking businesses.

Congress and the President even endorsed this approach in the regulatory relief package approved in late September.

But standing in the way of the Fed's good intentions is the Hart-Scott Rodino Antitrust Improvement Act of 1978, which gives the Federal Trade Commission jurisdiction over mergers involving companies with more than $100 million of assets.

This law requires companies to pay $45,000 filing fees and gives the FTC 30 days to review a deal. The agency can derail the transaction for even longer if it believes antitrust issues are raised.

Banks normally are not confronted by Hart-Scott-Rodino because the law expressly exempts any transaction that must be approved by a banking regulator.

But under the Fed's expedited rules, a banking regulator would no longer be approving each deal.

To Michael B. Mierzewski, a partner at the Washington law firm of Arnold & Porter, that spells trouble. …

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