The FRB and OCC today announced that they will hold a public hearing on CIT’s pending acquisition of OneWest Bank. These hearings are not unusual in large transactions, but they are also not routine and usually force significant concessions from transaction parties to ensure successful approvals.
However, this hearing is not only a reminder of the importance of community outreach, but also an alert to the changing focus by the FRB and OCC on M&A. With the FRB under fire, including from the left, it will in our view work very hard to bullet-proof approvals on social-policy grounds. Critics on both sides of the aisle also question the effectiveness of large-bank internal controls and resolution plans, with the OCC particularly critical on the risk-management front given its “heightened expectations”.
Careful advance planning both before a transaction is announced and then in its release and subsequent filings is thus critical to ensure successful completion in the current environment. Federal Financial Analytics has advised clients on several of the most controversial transactions in recent years and would be pleased to describe the steps we have found successful in this regard. If you would like to discuss this further, please send an email to firstname.lastname@example.org or call 202-589-0880 and we will be pleased to arrange an appropriate follow-up.