Capital One-Discover Deal Seen as 'Dangerous'

Sen. Elizabeth Warren leads charge against $35B merger, saying it will hurt 'working people'
By Jenn Gidman,  Newser Staff
Posted Feb 21, 2024 9:03 AM CST
Capital One-Discover Deal Faces 'Gale-Force Headwinds'
A Capital One branch office is seen on May 7, 2009, in New York.   (AP Photo/Mark Lennihan, File)

Capital One announced on Monday that it was buying Discover Financial Services, in a $35 billion deal to combine two of the nation's largest credit-card firms. But experts say it will take at least a year for the merger to be completed, and there's already pushback from advocacy groups and lawmakers who fear consumers will face an even bigger "squeeze" in "a shrinking credit card market dominated by a handful of large players," per NBC News. The merger is set to face "gale-force headwinds from a Washington that is deeply skeptical of consolidation [and] anxious regarding consumer-facing issues in an election year," Isaac Boltansky of global financial services company BTIG says in a statement. More coverage:

  • Sen. Elizabeth Warren weighs in: The Massachusetts Democrat, long a staunch consumer advocate, is already stepping up to urge regulators to block the deal, per the Guardian. "This Wall Street deal is dangerous and will harm working people," Warren says in a statement, noting that the deal "threatens our financial stability, reduces competition, and would increase fees and credit costs for American families."
  • Other critics: Warren was joined in her objection by other Democrats, including Ohio Sen. Sherrod Brown, per the Hill. "With a merger this size, the regulators need to ensure our financial system remains strong and competitive, so that consumers continue to have access to safe, affordable financial products and services," Brown warns.
  • 'Savior' for Discover: That's how the New York Times speculates Capital One will frame its role in yanking the smaller company "out of a morass of financial and regulatory troubles." The AP adds that Capital One is banking on consumers continuing to use their credit cards and run up interest charges, which will benefit both companies in bulk. "Once combined, the two companies will have more loans to customers on their credit cards than the much larger JPMorgan and Citigroup combined," the outlet notes.
  • What about Visa and Mastercard? The Wall Street Journal notes the merger is "probably not welcome news" for these two competitors, though one analyst minimizes it as just a "small negative." The Times, meanwhile, makes the argument that Visa and Mastercard could benefit from news of the deal.
  • Primer: The Journal has the scoop on everything consumers need to know about the merger, including what will happen to your Capital One or Discover credit cards.
(More Capital One stories.)

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