Democratic chorus against proposed Capital One-Discover merger grows louder

The proposed merger between credit card companies Capital One and Discover has been criticized by Democrats on the House Financial Services Committee for what they say are mergers and lax regulation of the financial sector.

16 Democrats on the House Financial Services Committee, including Ranking Member Maxine Waters (D-Calif.); wrote a letter On Wednesday, he accused the heads of major financial regulators of “rubber-stamping” large mergers and delaying updates to merger guidelines requested by President Biden.

“We urge government agencies to ditch the rubber stamp and quickly complete a robust merger review process before we are left with an oligopoly of megabanks serving voters,” Waters and other Democrats wrote.

Democrats’ latest efforts on potential merger Followed by similar letters Sen. Elizabeth Warren (D-Mass.) and other House Democrats were dispatched over the weekend to make similar claims and urge regulators to block the sale altogether.

“To protect consumers and financial stability, we urge you to block this merger and strengthen the proposed policy statements to prevent future harmful transactions,” Warren and her co-authors wrote.

Financial regulators have come under fire since dropping the ball last year after failing to detect problems with common interest rate exposures at Silicon Valley Bank (SVB) and Signature Bank, which nearly led to the collapse of the banking sector. There is. SVB CEO Greg Becker was then a board member of the San Francisco Fed, essentially acting as one of his own regulators.

“Weak supervision and regulation must be corrected,” said Michael Barr, vice chairman of the Federal Reserve Board of Supervisors. postmortem analysis About failure.

JPMorgan Chase CEO Jamie Dimon, who worked with the Treasury Department to help rescue another failed bank after SVB’s collapse, said this week that the Capital One-Discover merger will be cleared by regulators. He expressed his opinion that it should be done.

“I think companies should be allowed to innovate, grow and merge,” he said on the CNBC television network.

The merger will make Capital One the nation’s sixth largest bank and single largest credit card issuer, continuing a long-term trend of consolidation among consumer finance providers.

From 1994 to 2022, the top 10 credit card issuers increased their loan holdings from about 57 percent of the market to 82 percent of the market. Consumer Financial Protection Bureau.

credit card debt For U.S. consumers, spending fell after the pandemic, but has since rebounded to a record high of over $1 trillion. This follows a long-term trend over the past few decades of increasing credit card and household debt while wages have stagnated or only increased slightly.