Bill Summary
The "Failing Bank Acquisition Fairness Act" aims to regulate mergers involving banks that are in default or at risk of default, specifically by restricting the use of concentration limit exceptions during such transactions. Under this legislation, agencies like the Federal Reserve and the FDIC can only approve mergers that exceed normal concentration limits if they can provide clear and convincing evidence that the merger is necessary to prevent significant economic disruption or adverse effects on financial stability.
The Act outlines the conditions under which these exceptions can be applied, emphasizing the need for alternative bids from well-capitalized and well-managed institutions before allowing a merger that would typically breach concentration limits. Additionally, the Act requires agencies to justify any waivers for concentration limits to Congress and make these justifications publicly available. It also prevents the consideration of "bad faith bids" in the least costly determination for the Deposit Insurance Fund, ensuring that only compliant bids are considered.
Overall, this legislation seeks to ensure fairness and stability in the banking sector during times of crisis, promoting transparency and due diligence in the acquisition of failing banks.
Possible Impacts
The "Failing Bank Acquisition Fairness Act" outlined in the provided legislation could have several impacts on individuals and the broader economy. Here are three examples:
1. **Increased Financial Stability**: The legislation aims to prevent significant economic disruption by ensuring that the acquisition of failed banks is handled carefully. By limiting concentration limit exceptions to situations where the responsible agency determines that a merger is necessary to maintain financial stability, the act may help to ensure that the banking system remains stable. This could lead to greater confidence among consumers and businesses, potentially resulting in increased investment and spending, which benefits the overall economy.
2. **Impact on Employment**: If a failed bank is acquired by a larger institution under the provisions of this act, employees at the failed bank may face job insecurity or layoffs if the acquiring institution decides to streamline operations. Conversely, if the merger helps stabilize the financial institution and leads to growth, it could also create new job opportunities within the combined entity or in related sectors as the economy stabilizes and grows.
3. **Limited Options for Acquiring Institutions**: The legislation imposes stricter requirements on acquiring banks by defining "qualified bids" and limiting exceptions to concentration limits. This may restrict smaller or less-capitalized banks from acquiring failed institutions unless they meet specific criteria. As a result, this could lead to fewer competitive options in the market and may disadvantage consumers by reducing the number of banks available to serve their needs. Consumers might face fewer choices for banking services, which could affect fees, interest rates, and available services.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6556 Reported in House (RH)]
<DOC>
Union Calendar No. 406
119th CONGRESS
2d Session
H. R. 6556
[Report No. 119-475]
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 10, 2025
Mr. Lynch introduced the following bill; which was referred to the
Committee on Financial Services
February 2, 2026
Additional sponsor: Mr. Gottheimer
February 2, 2026
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on
December 10, 2025]
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Failing Bank Acquisition Fairness
Act''.
SEC. 2. CONCENTRATION LIMIT EXCEPTIONS ONLY AVAILABLE TO AVOID SERIOUS
ADVERSE ECONOMIC OR FINANCIAL EFFECTS.
(a) Concentration Limits With Respect to Deposits.--
(1) Federal deposit insurance act.--The Federal Deposit
Insurance Act (12 U.S.C. 1811 et seq.) is amended--
(A) in section 18(c)(13)--
(i) by amending subparagraph (B) to read as
follows:
``(B) Subparagraph (A) shall not apply to an interstate merger
transaction if--
``(i) such interstate merger transaction involves 1 or more
insured depository institutions in default or in danger of
default and the responsible agency determines, based on clear
and convincing evidence, that consummation of the proposed
interstate merger transaction is necessary to prevent
significant economic disruption or significant adverse effects
on financial stability, and the Corporation has not received
any qualified bid from a company that is not subject to the
prohibition in subparagraph (A); or
``(ii) the Corporation provides assistance under section 13
to facilitate such interstate merger transaction and the
responsible agency determines, based on clear and convincing
evidence, that consummation of the proposed interstate merger
transaction is necessary to prevent significant economic
disruption or significant adverse effects on financial
stability, and the Corporation has not received any qualified
bid from a company that is not subject to the prohibition in
subparagraph (A).''; and
(ii) in subparagraph (C)--
(I) in clause (i), by striking
``and'' at the end;
(II) in clause (ii), by striking
the period at the end and inserting a
semicolon; and
(III) by adding at the end the
following:
``(iii) the term `qualified bid' means an application,
proposed application, or bid from a company where--
``(I) if applicable, the company, any affiliate
insured depository institution, and any affiliate
depository institution holding company is well
capitalized and well managed, as of the date of the
application, proposed application, or bid; and
``(II) upon consummation of the transaction, the
resulting insured depository institution is well
capitalized;
``(iv) the term `well capitalized'--
``(I) with respect to an insured depository
institution, has the meaning given such term in section
38(b) (12 U.S.C. 1831o(b));
``(II) with respect to a bank holding company, has
the meaning given such term in section 2(o)(1)(B) of
the Bank Holding Company Act of 1956 (12 U.S.C.
1841(o)(1)(B));
``(III) with respect to a savings and loan holding
company, has the meaning given such term in section
238.2 of title 12, Code of Federal Regulations; and
``(IV) with respect to a company that is not an
insured depository institution, bank holding company,
or savings and loan holding company, means maintaining
equity capital that the Corporation determines is
commensurate with the capital maintained by an insured
depository institution that is well capitalized; and
``(v) the term `well managed' has the meaning given such
term in section 2(o)(9) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(o)(9)).''; and
(B) in section 44, by amending subsection (e) to
read as follows:
``(e) Exception for Banks in Default or in Danger of Default.--
``(1) General exception.--The responsible agency may,
without regard to paragraph (1), (3), (4), or (5) of subsection
(b) or paragraph (2), (4), or (5) of subsection (a), approve an
application under subsection (a)(1) for approval of a merger
transaction if--
``(A) the merger transaction involves 1 or more
banks in default or in danger of default; or
``(B) the Corporation provides assistance under
section 13(c) to facilitate such merger transaction.
``(2) Concentration limit exception.--The responsible
agency may, without regard to subsection (b)(2), approve an
application under subsection (a)(1) for approval of a merger
transaction if--
``(A) the merger transaction involves 1 or more
banks in default or in danger of default and the
responsible agency determines, based on clear and
convincing evidence, that consummation of the proposed
interstate merger transaction is necessary to prevent
significant economic disruption or significant adverse
effects on financial stability, and the Corporation has
not received any qualified bid from another institution
that is not subject to the prohibition in subsection
(b)(2); or
``(B) the Corporation provides assistance under
section 13(c) to facilitate such merger transaction and
the responsible agency determines, based on clear and
convincing evidence, that consummation of the proposed
interstate merger transaction is necessary to prevent
significant economic disruption or significant adverse
effects on financial stability, and the Corporation has
not received any qualified bid from another institution
that is not subject to the prohibition in subsection
(b)(2).
``(3) Qualified bid defined.--In this subsection, the term
`qualified bid' has the meaning given that term in section
18(c)(13)(C).''.
(2) Bank holding company act of 1956.--The Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended--
(A) in section 3(d), by amending paragraph (5) to
read as follows:
``(5) Exception for banks in default or in danger of
default.--
``(A) General exception.--The Board may, without
regard to subparagraph (B) or (D) of paragraph (1) or
paragraph (3), approve an application pursuant to
paragraph (1)(A) if--
``(i) the application is for an acquisition
of 1 or more banks in default or in danger of
default; or
``(ii) the application is for an
acquisition with respect to which assistance is
provided under section 13(c) of the Federal
Deposit Insurance Act.
``(B) Concentration limit exception.--The Board
may, without regard to paragraph (2), approve an
application pursuant to paragraph (1)(A) if--
``(i) the application is for the
acquisition of 1 or more banks in default or in
danger of default and the Board determines,
based on clear and convincing evidence, that
consummation of the proposed acquisition is
necessary to prevent significant economic
disruption or significant adverse effects on
financial stability, and the Corporation has
not received any qualified bid from another
institution that is not subject to the
prohibition in paragraph (2); or
``(ii) the application is for an
acquisition with respect to which assistance is
provided under section 13(c) of the Federal
Deposit Insurance Act and the Board determines,
based on clear and convincing evidence, that
consummation of the proposed acquisition is
necessary to prevent significant economic
disruption or significant adverse effects on
financial stability, and the Corporation has
not received any qualified bid from another
institution that is not subject to the
prohibition in paragraph (2).
``(C) Qualified bid defined.--In this paragraph,
the term `qualified bid' has the meaning given that
term in section 18(c)(13)(C) of the Federal Deposit
Insurance Act.''; and
(B) in section 4(i)(8), by amending subsection (B)
to read as follows:
``(B) Exception.--Subparagraph (A) shall not apply
to an acquisition if--
``(i) such acquisition involves an insured
depository institution in default or in danger
of default and the Board determines, based on
clear and convincing evidence, that
consummation of the proposed acquisition is
necessary to prevent significant economic
disruption or significant adverse effects on
financial stability, and the Corporation has
not received any qualified bid (as defined in
section 18(c)(13)(C) of the Federal Deposit
Insurance Act) from another institution that is
not subject to the prohibition in paragraph
(2); or
``(ii) the Federal Deposit Insurance
Corporation provides assistance under section
13 of the Federal Deposit Insurance Act to
facilitate such acquisition and the Board
determines, based on clear and convincing
evidence, that consummation of the proposed
acquisition is necessary to prevent significant
economic disruption or significant adverse
effects on financial stability, and the
Corporation has not received any qualified bid
(as defined in section 18(c)(13)(C) of the
Federal Deposit Insurance Act) from another
institution that is not subject to the
prohibition in paragraph (2).''.
(b) Concentration Limit With Respect to Consolidated Liabilities.--
Section 14(c) of the Bank Holding Company Act of 1956 (12 U.S.C.
1852(c)) is amended--
(1) by redesignating paragraphs (1), (2), and (3) as
subparagraphs (A), (B), and (C), respectively;
(2) by striking ``With the'' and inserting the following:
``(1) In general.--With the''; and
(3) by adding at the end the following:
``(2) Limitation.--The Board may provide written consent
for an acquisition described in paragraph (1)(A) or in
paragraph (1)(B) only if the Board determines, based on clear
and convincing evidence, that consummation of the proposed
acquisition is necessary to prevent significant economic
disruption or significant adverse effects on financial
stability, and the Corporation has not received any qualified
bid (as defined in section 18(c)(13)(C) of the Federal Deposit
Insurance Act) from another institution that is not subject to
the prohibition in subsection (b).''.
SEC. 3. CONGRESSIONAL NOTIFICATION AND JUSTIFICATION FOR WAIVERS.
(a) In General.--Whenever the Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, or the Federal Deposit
Insurance Corporation waives a concentration limit under section
18(c)(13)(B) or section 44(e) of the Federal Deposit Insurance Act or
under section 3(d)(5), section 4(i)(8)(B), or section 14(c)(2) of the
Bank Holding Company Act of 1956, in connection with the acquisition of
a bank or insured depository institution in default or in danger of
default, or in connection with an acquisition with respect to which the
Federal Deposit Insurance Corporation provides assistance under section
13 of the Federal Deposit Insurance Act, the waiving agency and the
Federal Deposit Insurance Corporation, jointly, shall, not later than
30 days after such waiver, submit a written report to the Committee on
Financial Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs in the Senate containing--
(1) a justification for the waiver, including an analysis
of why it was necessary to prevent significant economic
disruption or significant adverse effects on financial
stability;
(2) a description of alternative bids or outcomes
considered, including efforts to solicit and encourage bids
from entities that would not require a waiver;
(3) an explanation of why alternative bids were not
selected, if applicable; and
(4) any recommendations for legislative or regulatory
changes to improve competition in future insured depository
institution resolutions.
(b) Public Disclosure.--The waiving agency submitting a report
under subsection (a) and the Federal Deposit Insurance Corporation
shall make the report publicly available on their respective websites,
subject to redactions for confidential supervisory information and any
other information described under section 552(b) of title 5, United
States Code.
SEC. 4. LIMITATION ON CONSIDERING BAD FAITH BIDS IN LEAST COST
DETERMINATION.
Section 13(c)(4) of the Federal Deposit Insurance Act (12 U.S.C.
1823(c)(4)) is amended by adding at the end the following:
``(I) Limitation on considering bad faith bids.--In
making a determination under this paragraph of whether
an exercise of authority is the least costly to the
Deposit Insurance Fund, the Corporation may not
consider any application, proposed application, or bid
from a company, if such application, proposed
application, or bid would result in violation of--
``(i) section 18(c)(13) or 44(b)(2); or
``(ii) section 3(d)(2), 4(i)(8), or 14 of
the Bank Holding Company Act of 1956.''.
Union Calendar No. 406
119th CONGRESS
2d Session
H. R. 6556
[Report No. 119-475]
_______________________________________________________________________
A BILL
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.
_______________________________________________________________________
February 2, 2026
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed