WASHINGTON, D.C.— Shayna Olesiuk, Director of Banking Policy, issued the following statement in connection with the Federal Reserve’s and Office of the Comptroller of the Currency’s approval of Capital One Financial Corporation’s (“Capital One”) to acquire Discover Bank and Discover Financial Services (“Discover”), which will result in the largest credit card company and the 6th largest bank in the country.
“The merger of Capital One and Discover is going to cost consumers and endanger financial stability. It will reduce competition, provide less consumer choice, enable higher fees and costs for consumers, and cause job losses. Adding insult to injury, this merger endangers financial stability and allows two banks with egregious histories of inadequate management, excessive risk-taking, and repeated illegal behavior to grow even larger and more interconnected. Rather than stopping such outrageous and inappropriate behavior, regulators are rewarding it.
“Under the law, Congress intended the banking agencies to deny mergers that, in any respects, fail to meet public interest objectives concerning convenience and needs, managerial resources and future prospects, and financial stability. As Better Markets detailed previously, this proposed merger fails all three considerations and amply justified, if not mandated, regulators’ duty to deny it.
“This merger comes on the heels of the recent decision to eliminate the $8 cap on credit card late fees, a move that would have saved consumers $10 billion per year. Instead, credit card companies will now be able to move billions from the pockets of working Americans to the credit card companies like Capital One and Discover. Moreover, research shows that larger credit card issuers like Capital One and Discover charge higher interest rates to consumers regardless of how good their credit ratings. Even before the merger, Capital One was already among the highest-priced credit card issuers in the country with interest rates on credit card products above 30%. The increased market concentration from this merger will almost certainly lead to higher credit card interest rates and higher fees charged to consumers. In fact, credit card companies in 2022 alone moved $164 billion in interest and fees from the pockets of consumers into the pockets of those companies. Those totals have surely climbed even higher as credit card usage has continued to increase.”
Better Markets’ comment letter in response to the merger can be found here.
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
