SOUTH BRONX, July 19 – Capital One has applied to buy Discover, in an anticompetitive deal that should be rejected by regulators if they mean what they have been saying. After they applied late March 20, Inner City Press submitted a second Freedom of Information Act request to the Office of the Comptroller of the Currency (and to the Federal Reserve).
On May 14 - still without providing FOIA documents - the OCC and Fed set a July 19 virtual public meeting.
On the eve of it, Capital One announced a vague and less than credible plan - they previously violated their ING Direct pledge - including this time $75 billion in largely subprime auto loans.
Fair Finance Watch testified, with Inner City Press on the FOIA:
This proposal is anticompetitive, and Capital One is making a mockery of the Community Reinvestment Act, with an absurdly small CRA assessment area and now, at the 11th hour, a cynical pledge that includes $75 billion in subprime, often predatory car lending.
How much of this last minute pledge would in fact be subprime? At what interest rates? The regulators should ask, today - and must extend the comment period. You have and will hear from colleagues about the ongoing lending disparities. I want to focus in my three minutes on the lack of transparency, and the regulatory agencies' role in it.
The day the banks announced the proposed merger, Inner City Press submitted Freedom of Information Act requests to both the Federal Reserve and the Office of the Comptroller of the Currency.
The Fed, as has become a pattern, granted Inner City Press' FOIA request expedited treatment - and then did not provide any of the responsive documents, claiming it needed more time. The OCC did at least respond to the FOIA request - but it withheld, in full, 193 out of 210 responsive pages.
From what was released, it shows three meetings with Capital One and the OCC in February and March, right before the start of the public comment period. An OCC email says "the purpose of this meeting is to get everyone on the same page out of the gate" in response to an email from Capital One's lawyer. This is called regulatory capture. Can you say, What's in your wallet?
...The Philadelphia National Bank case of the Supreme Court, unlike the Chevron deference relied on not yet overrule, stated that "a merger which produces a firm controlling an undue percentage share of the relevant market, and results in a significant increase in the concentration of firms in that market, is so inherently likely to lessen competition substantially that it must be enjoined in the absence of evidence clearly showing that the merger is not likely to have such anticompetitive effects." 374 U.S. 321 at 363.
Here, the presumption has not been rebutted - quite the contrary, given Capital One's rogue and predatory ways, going back to its acquisition of ING Direct and beyond. On the current record, this proposed merger must be rejected. Capital One's application for regulatory approval must be denied. My concludes my remarks, but not my FOIA requests
On June 25 the OCC belatedly responded to Inner City Press' FOIA request - by withholding in full 185 pages. OCC FOIA production on DocumentCloud here. Inner City Press appealed.
At the July 19 public meeting, "each speaker will be allotted three minutes to speak at the meeting," the OCC and Fed on July 9 said.
Meanwhile Capitol One lobbying continues, for example with a Pennsylvania state legislator extolling Capital One's subprime, here.
The OCC put part of its application in its reading room. And it is an outrage, Capital One gaming the CRA system. For example "the Proposed Transaction would result in CONA establishing a new assessment area in Delaware, which will include all census tracts in Sussex County and seven contiguous census tracts in Kent County."
That for a nationwide card and subprime auto lender...
As documented by Fair Finance Watch, Discover Bank in 2022 denied mortgage loans application from African Americans more than twice as frequently as those of whites.
Previously, Inner City Press and NCRC challenged Capital One's acquisition of ING Direct, see here.This time, given the antitrust enforcement claims being made in DC, this proposal should be dead in the water. Watch this site.
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