Exposing how bank consolidation has been a key driver of rural distress, and urging DOJ to take remedial action

In February 2022, Antimonopoly Counsel attorney Basel Musharbash represented Farm Action and e2 Entrepreneurial Ecosystems in drafting and submitting a public comment to the Department of Justice Antitrust Division exposing the severe harms that unrestrained bank mergers have caused to rural communities since the 1990s — and urging the Antitrust Division to take remedial action. The comment was submitted in response to a request for information by the Antitrust Division on “whether and how the division should revise the 1995 Bank Merger Competitive Review Guidelines[.]”

The comment provided the Antitrust Division with original, comprehensive research demonstrating that unrestrained bank mergers have caused community banks to disappear en masse since the 1980s—leaving many rural communities dependent on absentee-owned banks or with limited access to financial services entirely. The comment then reported to the Division how the loss of small and locally owned banks in rural communities has undermined household financial security, deprived rural businesses and farmers of credit, contributed to the decline of rural neighborhoods, extracted rural capital for use elsewhere, and, at bottom, deprived rural communities of critical resources for self-determination.

“The harms to rural communities summarized in this comment,” the commenters concluded, “deeply undermine the economic theories—in vogue when the 1995 Bank Merger Guidelines were adopted but since empirically discredited—that bank mergers are socially or economically ‘efficient.’” Because consolidation in the banking industries contributed to rural decline in these important ways, the comment urged the Antitrust Division to “adopt revised guidelines under which the Department will ordinarily challenge mergers based on bright-line rules grounded in market realities and will not consider mere divestitures or speculations about post-merger efficiencies or market behavior as justifications for proposed bank mergers.”