A coalition of 22 advocacy groups warned in a letter to Jerome Powell, the Fed chair; Martin Gruenberg, chair of the Federal Deposit Insurance Corp; Michael Hsu, acting comptroller of the currency; and Jonathan Kanter, assistant attorney general at the Department of Justice (DOJ), that the merger would "further concentrate risk" in the financial system and should be stopped. They urged regulators to block Capital One’s $35bn takeover of Discover. Urging the Federal Reserve and DOJ to intervene, the coalition stated that combining two of the largest US credit card companies would damage competition, and permit Capital One to hike fees after closing the acquisition, announced by the companies last month.
Signatories included the National Community Reinvestment Coalition (NCRC), the American Economic Liberties Project (AELP), Public Citizen, and Americans for Financial Reform.
In a statement, a Capital One spokesman said it had a “long history” of serving consumers and businesses with “best-in-class” products and services. “As this process moves forward, we are fully committed to engaging with consumer organizations and other stakeholders to demonstrate the significant benefits of this transaction to consumers, communities, and competition in the marketplace.”
The NCRC responded that “Capital One is a notorious bad actor, even at its current size, and should not be allowed to further concentrate market power.” Capital One is one America’s biggest banks, and a key issuer of Visa and MasterCard credit cards in the US. Discover, with 305 million global cardholders, is one of the largest card payment networks in the US.
While Capital One argues that the merger would enable it to “build a payments network that can compete” with the market’s largest players, the AELP pointed out that “Vague claims that the merger will benefit competition in payment networks are a Trojan Horse concealing the merger’s real goals: higher interchange fees, more costly credit cards, and a surge in size connoting an implicit too-big-to-fail government backstop. It might be lucrative for Capital One, but everyone else will pay.”
Capital One expects to close the deal by late 2024 or early 2025, subject to regulatory and shareholder approvals.
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Read the March 6, 2024 Guardian article.
Read the March 6, 2024 NCRC article.
The Fed declined to comment.
