Failing Bank Acquisition Fairness Act

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6556 Introduced in House (IH)]

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119th CONGRESS
  1st Session
                                H. R. 6556

  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

_______________________________________________________________________

                                 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.''.
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