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Federal Reserve Vice Chair for Supervision Michelle Bowman said Oct. 6 that the Fed’s analysis of bank mergers can understate competition in rural and underserved markets, making some community-bank mergers harder. She called the approach “antiquated” and said regulators still need to modernize merger reviews, new-bank approvals and call-report requirements.
Federal Reserve Vice Chair for Supervision Michelle W. Bowman said Tuesday that the Fed’s bank-merger analysis can understate competition in rural and underserved markets, making it harder for some community banks to merge. At the Community Banking Research Conference in St. Louis, she called the approach “antiquated and harmful” and said modernizing merger review remains unfinished work for banking regulators.
Bowman said the current competitive analysis disproportionately affects rural banks in small and underserved markets because it does not fully account for the competition those institutions face. She argued that a merger could, in some cases, produce a stronger and more competitive banking environment, even when existing review methods make approval more difficult. Her remarks described her view of the framework; the source report does not identify a specific merger application or regulatory decision tied to the speech.
She also pointed to two other areas for reform: new-bank formation and the burden of filing the Consolidated Reports of Condition and Income, commonly called call reports. Bowman said federal and state agencies should clarify approval standards, including capital requirements, set specific and reasonable processing timelines, and issue conditional approvals where appropriate. On call reports, she cited an FFIEC request for information issued in December 2025 that sought public comment on reporting burdens and possible ways to streamline filings.
How Merger Reviews Affect Rural Banks
The dispute matters because merger review rules can affect whether smaller banks in rural communities can combine operations. If the analysis does not capture competition beyond a narrow market measure, Bowman’s concern is that regulators may not fully recognize the competitive pressures facing those institutions. That could make a proposed merger harder to approve, though her speech did not establish how often that happens or quantify its effects.
For communities, the stakes include the structure and availability of local banking services. Bowman’s argument is that some combinations could strengthen a bank’s ability to compete, but the speech does not show that every rural merger would have that result. Any application would still be subject to regulatory review, and the details of the proposed deal and market would matter.
Her comments also connect merger policy to the operating conditions for community banks more broadly. Clearer timelines and approval standards for new banks, alongside less burdensome reporting, could affect how institutions enter the market and meet supervisory requirements. Bowman presented these as areas for further work, not as changes already adopted.
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Bowman’s Broader Regulatory Agenda
Bowman said the Fed had taken several steps over the preceding two years to support community banks. According to her remarks, those steps included focusing supervision on risks that could affect a firm’s financial condition, working with other banking agencies to update the community bank leverage ratio, and ending the Novel Activities Supervision Program. She described merger analysis as one of the areas where modernization remains outstanding.
On new institutions, Bowman referred to an FFIEC statement issued in June reaffirming support for de novo bank formation. She said agencies could do more to translate that support into clearer and more predictable application processes. For reporting, the FFIEC’s December 2025 request for information invited stakeholders to identify excessive burdens and options for streamlining the call report. The source report does not provide the results of that consultation.
“This analysis is antiquated and harmful to community banks that may face greater difficulties in merging, even when doing so may actually create a stronger and more competitive banking environment.”
— Federal Reserve Vice Chair for Supervision Michelle W. Bowman
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Scope of Any Merger-Review Changes
Bowman’s remarks do not specify what changes to merger analysis she wants the Fed or other agencies to adopt, or when a proposal might be issued. The report does not say whether regulators have agreed on revisions, whether any are under formal consideration, or how the current framework would be adjusted for rural markets.
It also provides no case-level evidence, figures on delayed or rejected rural mergers, or estimate of the effects on banking access. Bowman’s account is a policy assessment, not a finding that a particular merger was wrongly blocked. The outcomes of the FFIEC’s call-report consultation and any follow-up on de novo application standards are also not stated.
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Regulators’ Next Steps
The next developments to watch are whether the Federal Reserve and other banking agencies propose changes to competitive analysis, publish clearer standards or timelines for de novo applications, or act on the FFIEC’s call-report streamlining work. Bowman’s speech called for further action but did not announce a specific rulemaking, timetable or formal policy change.
Until agencies provide more detail, the existing merger-review process remains the operative framework. Any future changes, and their effects on rural institutions, will depend on what regulators propose and how they apply revised standards to individual cases.
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Key Questions
What did Michelle Bowman criticize?
She said the Fed’s competitive analysis of bank mergers can understate competition faced by rural banks in small and underserved markets, potentially making mergers harder to complete.
Did the Fed announce a new merger rule?
No. Bowman called for more modernization, but her remarks did not announce a specific rule, proposal or implementation date.
What other changes did Bowman discuss?
She called for clearer standards and reasonable processing timelines for new-bank applications, and pointed to efforts to streamline bank call-report requirements.
What remains unknown about the merger issue?
The remarks did not identify particular merger cases, quantify how many rural banks are affected, or explain how the competitive-analysis framework might be revised.
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