Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. Acting Comptroller of the Currency Michael Hsu is still concerned about the concentration of large firms atop the banking sector. Some banks remain too big to fail or, as he’s warned in the past, too big to manage. But injecting more competition into the marketplace might require some of Wall Street’s most formidable institutions to get even larger, he said during an American Banker webcast on Monday. “There should be competition amongst large banks, and simply prohibiting all mergers of large banks really locks in the concentration amongst the existing megabanks, and I don't think that's the right answer,” said Hsu. That isn’t to say the OCC is firing a starter pistol as bank M&A attorneys rev their engines, but he said the path for large bank mergers “is narrow, but it's there.” Federal Reserve Vice Chair for Supervision Michael Barr struck a similar note shortly after unveiling his plans for large bank capital requirements on Monday morning (more on that in a bit) — pointing out that banking regulators signed off on U.S. Bank’s acquisition of MUFG Union Bank within months of his arrival. “We know how to do mergers when they're appropriate and they go through their process and they meet they meet the statutory factors. And we would do that for any for any bank,” he said. The question now is how those messages will resonate around Wall Street and Capitol Hill. It’s certainly a softening compared to some of the Biden administration’s earlier rhetoric on bank mergers. And while there’s been some grumbling over how Assistant Attorney General Jonathan Kanter recently framed his overhaul of the DOJ’s bank merger playbook, there are signs that the regional bank turmoil this spring provided a costly reminder of what can occur when institutions fail to find solutions in the private sector. Still, any meaningful pivot is bound to upset progressives who’ve repeatedly warned of antitrust concerns. Sen. Elizabeth Warren (D-Mass.) blistered regulators for approving the U.S. Bank-Union Bank deal and has not let up even after a costly series of regional banking failures earlier this spring. She’ll chair a Senate Banking subcommittee hearing examining bank mergers on Wednesday that will feature testimony from Morgan Harper of the American Economic Liberties Project and Alexa Philo of Americans for Financial Reform — two think tanks that have warned against consolidation. IT’S TUESDAY — What did you make of Hsu and/or Barr’s comments on Monday? Send tips, gossip and suggestions to Sam at ssutton@politico.com and Zach at zwarmbrodt@politico.com
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