WASHINGTON, D.C. – U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, has urged federal banking regulators to thoroughly evaluate all aspects of the proposed merger between Capital One and Discover. In a letter to Federal Reserve Vice Chair for Supervision Michael Barr and Acting Comptroller Michael Hsu, Brown emphasized that this transaction should prioritize families, households, and businesses deserving of a fair financial system. He called on regulators to investigate how the merging banks plan to lower costs for consumers and save jobs while considering recent public input.
“The proposed merger between Capital One and Discover could create a new financial conglomerate while potentially limiting consumer choice for credit products and delivering unclear outcomes for small businesses. Regulators and the public must understand those implications before any potential approval,” Brown wrote. “This transaction could have crucial consequences—not only for the firms’ direct customers but also for the hundreds of millions of Americans who rely on credit and debit cards to live their daily lives.”
Brown stressed that regulators must protect consumers and ensure a competitive financial system remains in place as they review the merger proposal submitted in February. He has long advocated for banking regulators to overhaul their merger policy to maintain fairness in the banking sector.
The letter from Brown highlighted several concerns regarding the potential impacts of this merger:
1. The creation of a significant bank with nearly $630 billion in assets.
2. Potential limitations on consumer choices within the subprime credit card market.
3. The need for Capital One to clearly communicate its plans to deliver benefits from this merger.
4. The importance of public input in understanding the merger's impact on various stakeholders.
Brown noted that without proper safeguards, this merger could lead to job losses and other adverse effects on employees, especially in Ohio where Discover employs over 2,000 workers.
He urged regulators to demand detailed explanations from Capital One about how it intends to use its new position post-merger to benefit consumers and small businesses through reduced costs and greater fraud protections.
Additionally, Brown warned against further concentration in the credit card market which already sees 83 percent of outstanding loans held by the top 10 issuers.
Finally, he called attention to potential risks this merger poses to financial stability given past failures like Silicon Valley Bank and First Republic Bank.
In conclusion, Brown reiterated his call for federal agencies to ensure any decision made regarding this proposed merger is aligned with maintaining a fair financial system that serves all American families, households, and businesses effectively.