On Friday, Rise Economy and advocates from across the country voiced concerns about the potential negative impact of Capital One’s proposed acquisition of Discover during a public meeting held by bank regulatory agencies.
Just days earlier, Capital One announced a Community Benefit Agreement that lacks clear benefits for the public and fails to address several critical issues.
During the public hearing, Kevin Stein, Rise Economy’s Chief of Legal and Strategy, delivered testimony highlighting the concerns raised by the merger for low-income and Black, Indigenous, and People of Color communities across California. Stein’s comments are presented in full below:
“The question before us on the proposed Capital One/Discover merger should be: Will communities, small businesses and consumers be better off after this merger? The answer, even with this CBA, to that question is a resounding “no.”
“Thirteen years ago during the ING merger, Capital One made promises that we never accepted as sufficient, and that it ultimately did not keep. With this new CBA, there is no reason to believe they will keep their promises this time.
“And the purported benefits are not really benefits at all. The proposed CBA is built mainly on credit card and auto lending which do not meet the primary credit and wealth building needs of communities. On top of that, the proposed benefits combined, add up to not much more than the two institutions were doing separately.
“The promised benefits of this merger do not outweigh the expected harm. This CBA does not create a benefit for communities, it does not mitigate the harms of this merger and because of that this merger should be rejected.
“We are concerned that with the acquisition of Discover’s payments network, Capital One will harm small businesses by raising debit interchange fees.
“The CBA does not mitigate this harm.
“Capital One already charges consumers amongst the highest credit card interest rates in the country. Will Discover customers see their rates increase as a result of this merger, and how does that meet the convenience and needs test?
“The CBA does not mitigate this harm.
“Rise Economy reviewed California based CFPB consumer complaints filed since the start of the COVID pandemic. We found that Capital One and Discover combined received amongst the most complaints of over 1700 companies reviewed, across several categories, including receiving:
- the most credit card complaints; and
- the 4th most debt collection complaints
“No amount of promises made in a CBA will change this reality.
“In addition, both companies have committed numerous and significant compliance violations over the last few years.
“Regulators must not create perverse incentives and reward banks with poor compliance records by approving their mergers.
“This merger also raises financial stability concerns, representing a worrying concentration of credit card and auto loan risk, as well as potential climate related financial risk, as Capital One made at least $3.5 billion in loan commitments to the fossil fuel industry in recent years.
“None of these concerns were addressed in the proposed CBA.
“Lastly, Capital One reportedly led the industry charge to challenge the new CRA rules. Through such industry challenges to consumer protection, civil rights and climate justice rules, we believe Capital One is on the wrong side of the fight to protect consumer and community interests.
“This merger would be bad for California communities and it should be denied without substantial conditions to ensure that the public is protected and will benefit.”