Last month, TD Bank and First Horizon abandoned their $13.3 billion merger after failing to receive regulatory approval for the deal. In response, Keith Noreika, a former top Trump administration bank regulator, and Bryan Hubbard, his former OCC public affairs officer, took to the pages of this publication calling the banks’ termination of their deal the result of a “broken” merger review process and saying it “needs a reboot.” The truth is, Noreika — whose former law firm has been advising TD on its First Horizon acquisition — and Hubbard are right. Our bank merger process is broken, but it’s not for the reasons they think.

Despite their claim that our bank merger review process is broken and overly restrictive, in recent decades bank regulators have almost entirely failed to enforce our bank antitrust laws. Instead, they have overseen the drastic consolidation of their industry. The Federal Reserve, OCC and FDIC have not denied a bank merger in twenty years, despite mounting evidence that rampant bank consolidation has led to a range of competitive, consumer and economic harms. The U.S. has lost ten thousand of the banks it once had forty years ago — a 70% drop — and today the six largest bank holding companies control more assets than all others combined.

Bank consolidation is a policy choice, not a natural outcome. Noreika knows this particularly well — as acting head of the OCC, Noreika championed the Trump administration’s financial deregulation agenda, which sparked a wave of bank mergers and is now under fire for its role in enabling today’s crisis. As this publication has noted, eight of the ten biggest bank mergers of the past decade were announced since 2019, just a year after the passage of the Trump Dodd-Frank rollbacks.

The TD Bank merger was also particularly dangerous. TD’s own track record offered regulators an abundance of reasons to block a deal that would make the bank even bigger and more powerful. In 2020, for example, the Consumer Financial Protection Bureau ordered TD to pay $122 million in fines and restitution to 1.5 million Americans for deceptively charging consumers overdraft fees on ATM and debit card transactions. In 2021, TD settled a lawsuit alleging the bank knowingly charged multiple nonsufficient fund fees on the same transaction, and also agreed to a $12 million settlement in a lawsuit alleging it overcharged customers on ATM fees. Already this year, TD paid out a whopping $1.2 billion to settle a lawsuit alleging it knowingly aided the Stanford Financial Ponzi scheme while raking in billions of investors’ money.

A 2022 Capitol Forum report revealed that TD’s “aggressive sales goals and lax controls” resulted in systemic fraud and abuse directed toward its customers, as employees were driven to open fake accounts and saddle customers with unwanted services and products. TD’s behavior drew the wrath of lawmakers, as did the OCC after it was reported that the agency opted for a private reprimand to TD that ensured details about the abuses were not made public. Noreika had been acting head of the agency at the time, but his former law firm told the Capitol Forum that he was recused from decisions related to TD. Democratic lawmakers including Senate Banking Committee member Elizabeth Warren called for regulators to block any TD acquisitions until the bank addressed its behavior.

TD also has an unsettling track record of racial disparities in its lending. Among large U.S. banks, TD denied the highest proportion of mortgage applications from Black and Latino applicants. Instead of addressing its conduct, in the two years following, TD rejected Black mortgage applicants at nearly twice its overall rate.

Now that the deal has been called off, Noreika and Hubbard attribute the merger’s failure to a new “hostile environment” for mergers. It’s true that the Biden administration has moved to address consolidation in banking, but TD’s own poor record offered plenty to deter regulators from rushing to rubber-stamp the merger.

Ultimately, regulators’ long-running apprehension toward approving this deal is a welcome step toward addressing dangerous consolidation in our banking system. However, the truth is that bank regulators should endeavor to swiftly and decisively block mergers that will harm competition, communities and consumers. To that end, as the DOJ and FDIC review their bank merger guidelines, they must strengthen the merger review process to account for the wide array of harms caused by bank consolidation. Only then, with more robust enforcement and better bank merger policy in place, can we turn the page on an era of lax antitrust enforcement in banking and move toward a more competitive banking sector that benefits all Americans.