“It Would Defy Logic”: Advocates Push Back Against TD-First Horizon Merger

Consumer advocates and Democratic leaders are asking U.S. regulatory bodies to block TD Bank’s takeover of First Horizon Bank.

The Center for Responsible Lending (CRL) and Americans for Financial Reform Education Fund sent a letter to the Federal Reserve and Office of the Comptroller of the Currency asking them to reject a proposed merger between TD Bank and First Horizon Bank.

Their letter highlights reasons why regulators should stop the merger, pointing out misconduct by TD Bank and an “exacerbation of the ‘too-big-to-fail’ problem.” Other advocacy groups signed the letter in support.

Toronto-Dominion Bank, a Canadian company, announced a plan earlier this year to acquire Memphis, TN-based First Horizon for $13.4 billion in cash.

The Bank Merger Act requires the proposal to be assessed on competition, safety and soundness, and the needs of the community to be served, among other things. Those against it say TD Bank has a history of treating consumers poorly.

“The picture that emerges from TD Bank’s punitive overdraft policies and unfair and deceptive account practices is that TD is failing to meet the needs of communities it serves and lagging behind its industry peers. This proposed merger would harm consumers and small businesses, especially those in Black, Latino, and low-income communities,” said Nadine Chabrier, senior policy counsel at the CRL.

“This proposed merger fails to meet requirements established by the law. It would defy logic for the government to give their blessing.”

If the merger goes through, the resulting “mega-bank” would be the sixth largest in the country.

TD Bank’s shares have been underperforming compared to its peers since regulatory pushback on the deal began in earnest. 

“There has been quite a bit of underperformance for TD, and you can attribute the majority of that to what’s been happening on the regulatory front,” Stifel Financial Corp. analyst Mike Rizvanovic told Bloomberg.

“When you think about TD’s dynamic on where they make money and where they could deploy capital, if you’re on the wrong side of US regulators, it’s certainly not a good thing because it is such an important market for them.”

In July last year, President Biden issued an executive order emphasizing competition and the issue of concentration in American business.

“We must act now to reverse these dangerous trends, which constrain the growth and dynamism of our economy, impair the creation of high-quality jobs, and threaten America’s economic standing in the world,” it read.

U.S. Sen. Elizabeth Warren, D-Mass., and other lawmakers have pushed back on the deal, sending a letter to the OCC in June urging the office to stop the merger.

“As TD Bank seeks approval from your agency to increase their market share and become the sixth-largest bank in the U.S., the OCC should closely examine any ongoing wrongdoing and block any merger until TD Bank is held responsible for its abusive practices,” said Warren, D-Mass.