Several Democrats urged the Biden administration Sunday to block a proposed merger between Capital One and Discover Financial Services, arguing that it would consolidate the credit card market and limit consumer choice.
Sen. Elizabeth Warren (D-Mass.) and 12 House Democrats noted that the $35.3 billion merger would move Capital One from its standing as the nation’s ninth-largest bank to the sixth largest, and it would also make the company the country’s largest credit card issuer.
“This merger is bad for consumers,” the group said in a letter to Michael Barr, the vice chair for supervision of the Federal Reserve Board of Governors, and acting Comptroller Michael Hsu.
“To protect consumers and financial stability, we urge you to block this merger and strengthen your proposed policy statement to prevent harmful deals in the future,” they added.
The 13 Democratic lawmakers argued that consolidation in the banking sector will result in higher prices and more fees for consumers, as well as increased systemic risk in the financial system.
They also suggested that Capital One has “a concerning history of mistreating consumers,” while Discover has a “record of compliance failures.”
“This merger, on its face, has significant deficiencies,” Warren and the others wrote in the letter.
In addition to calling on Biden officials to block the merger, the lawmakers urged Hsu’s Office of the Comptroller of the Currency to strengthen its proposed policy statement on mergers.
They argued that the statement the office issued last month codifies its “current permissive approach to bank mergers” that “for decades has failed to protect consumer and the financial system.”
While Senate Banking Committee Chair Sherrod Brown (D-Ohio) did not join Sunday’s letter, he emphasized last week that “regulators need to ensure our financial system remains strong and competitive” given the size of the potential Capital One-Discover merger.
“A rubber-stamped merger that makes powerful financial companies even bigger and more powerful will do nothing for families,” Brown said in a statement.