"It would have been normal to have seen multiple mergers in recent years. Yet, this was not possible since the Obama administration would not approve them."

The Financial Stability Oversight Council was set up to oversee the operations of all of the banking regulatory bodies. There is a new head of this agency and seven of the 10 Board members are new or are about to be replaced.

Understand that while the Dodd Frank Act requires a number of broad changes in banking regulation, the law leaves the implementation of these changes to be dictated by the regulatory agencies. Thus, one can expect to see changes in the annual stress tests, the Living Wills, and in arcane rules like the Net Stable Funding Ratio and systemically important financial institution (SIFI) designations.

Without explaining these rules, what the changes mean for banking is lower capital and liquidity requirements and more freedom to merge. In addition, if Congress passes a law, as expected, raising the regulatory hurdle to $250 billion, from $50 billion, the ability to acquire other banking companies is made far simpler and less costly.

Why Merge?

Banking consumers have indicated their desire for digitally delivered services as, for example, millions begin to use mobile banking and tens of millions have already adopted Internet banking. Customers want these services because they are more convenient than a trip to a bank branch; because more analytics can be provided along with the transactional services; and because digital banking is faster and cheaper than traditional banking for the user.

Banks are spending billions of dollars to meet the market's demands. To make these expenditures economically feasible, the new systems require large numbers of customers – or operational scale. Mergers provide the necessary scale to validate the expenditures on the new systems.

However, even without the technological push to merge; there are business reasons to do so. Bank loan growth has slowed appreciably in commercial and real estate markets. Even some consumer sectors, like auto lending, have slowed. In periods like this it has been traditional for banks to seek to acquire large customer bases. The reason is usually big banks can eliminate the acquired company's operating system and sell more products to an underserved market segment – i.e., the smaller bank's customer base.

It would have been normal, therefore, to have seen multiple mergers in recent years. Yet, this was not possible since the old regulatory crew, the Obama administration, would not approve them.

This is no longer the case. The game is on again.

Commentary by Richard X. Bove, an equity research analyst at the Vertical Group and the author of "Guardians of Prosperity: Why America Needs Big Banks" (2013).

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