We analyze whether and how bank deregulation relates to the M&A centric consolidation of U.S. banking industry. Using difference-in-difference approach on M&A activity of banks over a time span of 1990-2009, we find a positive and statistically significant effect of deregulation on bank consolidation in overall and functionally diverse M&A terms. However, geographically diverse M&A activity remains largely unaffected by bank deregulation. Importantly, these results are predominantly observed in a pre-crisis period analysis. We also confirm negative implications of deregulation and consolidation over the bank stability, thus supporting the popular narrative that holds bank deregulation partly responsible for the 2007 financial calamity.