Failing Bank Acquisition Fairness Act

Bill Number

H.R. 6556

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Finance and Financial Sector

Status

Introduced

Latest Action

2026-02-02: Placed on the Union Calendar, Calendar No. 406.

Last Updated

2026-07-01T20:22:48Z

AI-Generated Summary

Purpose of the Legislation

The Failing Bank Acquisition Fairness Act (H.R. 6556) aims to limit exceptions to "concentration limits" (rules that prevent any single bank or group from controlling too large a share of deposits or liabilities in a market) in mergers or acquisitions involving failed or failing banks. It ensures such exceptions are used only when absolutely necessary to avoid major economic harm or threats to the overall financial system, while promoting fair competition by requiring agencies to seek alternative buyers.

Key Provisions

• Restrictions on Concentration Limit Exceptions:
• Amends the Federal Deposit Insurance Act (FDIA) and Bank Holding Company Act of 1956 (BHCA) to allow exceptions for mergers involving banks in default (already failed) or danger of default (likely to fail soon) only if:
• The responsible agency (e.g., FDIC, Federal Reserve, or Comptroller of the Currency) finds, based on "clear and convincing evidence" (a high standard of proof), that the merger is essential to prevent "significant economic disruption" or "significant adverse effects on financial stability."
• The FDIC has not received any "qualified bid" from a buyer not subject to the concentration limit prohibition.
• Applies to interstate mergers, bank holding company acquisitions, savings and loan holding companies, and consolidated liabilities.
• Defines a "qualified bid" as one from a well-capitalized (having sufficient financial reserves) and well-managed (meeting regulatory standards for sound operations) entity, ensuring the resulting bank would also be well-capitalized.

• General Exceptions for Failed Banks:
• Agencies can approve mergers without full review for other limits (e.g., on interstate banking) if the bank is in default or danger of default, or if FDIC provides emergency assistance under Section 13 of the FDIA (a tool for resolving failing banks).

• Congressional Notification and Justification:
• When an agency waives a concentration limit, it and the FDIC must submit a joint report to Congress within 30 days, including:
• Justification for the waiver and why it prevents economic or financial harm.
• Details on alternative bids considered, efforts to solicit non-waiver bids, and reasons for rejecting them.
• Recommendations for improving competition in future bank resolutions.
• Reports must be publicly posted online, with redactions for sensitive information (e.g., confidential business details protected under freedom of information laws).

• Limitation on "Bad Faith" Bids:
• Amends FDIA Section 13(c)(4) to exclude bids that would violate concentration limits from the "least cost" determination (a requirement that bank resolutions minimize costs to the Deposit Insurance Fund, which protects depositors).

Significant Changes to Existing Law

• Tightened Standards for Exceptions: Previously, agencies had broader discretion to waive concentration limits in failed bank mergers (e.g., under FDIA Sections 18(c)(13) and 44(e), and BHCA Sections 3(d), 4(i), and 14). The bill raises the bar by requiring clear evidence of necessity, absence of qualified alternatives, and explicit ties to preventing systemic harm—replacing looser language.
• New Definitions and Requirements: Introduces precise definitions for "qualified bid," "well capitalized," and "well managed," cross-referencing existing regulations. Adds mandatory congressional reporting and public disclosure, which were not required before.
• Exclusion of Non-Compliant Bids: Newly prohibits considering bids that breach concentration rules in cost calculations, ensuring resolutions prioritize compliant options.

Potential Impacts

• On Government Agencies: Increases workload for the FDIC, Federal Reserve, and Comptroller of the Currency through stricter approval processes, evidence gathering, and reporting obligations. This could slow down emergency resolutions but enhance accountability.
• On Citizens: May foster greater competition in banking by discouraging mergers that consolidate market power, potentially leading to better services, lower fees, or more options for consumers. It protects the Deposit Insurance Fund (backed by taxpayer funds) by avoiding costly "too-big-to-fail" rescues.
• On International Relations: No direct impacts mentioned; the bill focuses on domestic U.S. banking regulations.

Main Stakeholders Affected

• Regulatory Agencies: FDIC (leads bank resolutions), Federal Reserve (oversees holding companies), and Comptroller of the Currency (supervises national banks)—they face new constraints and reporting duties.
• Banks and Financial Institutions: Large banks and holding companies may find it harder to acquire failed rivals without proving systemic necessity, while smaller, well-capitalized institutions could gain more opportunities to bid.
• Congress and the Public: Lawmakers gain oversight via reports; citizens benefit from transparency and safeguards against financial instability.
• Failing Banks' Creditors and Depositors: Protected through orderly resolutions that prioritize stability and competition.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: Strengthens antitrust-like protections in banking law by embedding higher evidentiary standards ("clear and convincing evidence") into statutes, potentially reducing litigation over arbitrary agency decisions. Aligns with existing frameworks like the Dodd-Frank Act's focus on financial stability but adds competition mandates.
• Constitutional Implications: None directly raised; the bill operates within Congress's commerce clause authority over banking and does not infringe on due process, as it imposes procedural safeguards rather than restricting rights.
• Political Implications: Addresses concerns about favoritism in bank bailouts (e.g., post-2008 crisis mergers), promoting bipartisan goals of market fairness and systemic risk reduction. The public reporting could invite scrutiny of agency actions, influencing future regulatory debates on bank size and competition.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Lynch, Stephen F. [D-MA-8]

Cosponsors (1)

Rep. Gottheimer, Josh [D-NJ-5]

Recent Actions

• 2026-02-02: Placed on the Union Calendar, Calendar No. 406.
• 2026-02-02: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-475.
• 2026-02-02: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-475.
• 2025-12-17: Ordered to be Reported (Amended) by the Yeas and Nays: 51 - 0.
• 2025-12-17: Committee Consideration and Mark-up Session Held
• 2025-12-16: Committee Consideration and Mark-up Session Held
• 2025-12-10: Referred to the House Committee on Financial Services.
• 2025-12-10: Introduced in House
• 2025-12-10: Introduced in House

Bill Versions

• Failing Bank Acquisition Fairness Act — issued 2025-12-10 — PDF (13 pages)
• Failing Bank Acquisition Fairness Act — issued 2026-02-02 — PDF (16 pages)