Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, delivered the following remarks at an all-day virtual meeting convened by the Federal Reserve and the Office of the Comptroller of the Currency (OCC). This meeting allowed members of the public to share their views on the proposed merger of Capital One and Discover.

Thank you very much. Good morning, everyone. I want to thank the Federal Reserve and OCC for convening this public meeting on the proposed merger of Capital One and Discover.

As the Ranking Member of the Financial Services Committee, which has oversight of the banking industry, I believe that workers and consumers must have the chance to voice their concerns about these mergers directly to regulators.

Especially with mergers that will affect millions of people.

Now, the law requires regulators to consider the impact a merger has on competition, financial stability, and the convenience and needs of affected communities.

The proposed merger of Capital One and Discover, creating the largest credit card issuer and 6th largest commercial bank, must be rejected because it fails these tests.

Post-merger, consumers may have to pay more for Capital One’s credit cards. The CFPB has shown that while the largest card issuers have grown in market share, they have charged consumers higher interest rates and annual fees compared to those charged by smaller issuers. This has resulted in consumers with cards from the big issuers paying $400 to $500 more annually than those with cards from smaller issuers. Unfortunately, small issuers are community banks and credit unions that serve small areas not easily accessible for most consumers and this merger will leave consumers with fewer national options.

There are also vertical integration concerns with this merger. If Capital One were to control its own credit card network, it could influence multiple points of the marketplace by setting prices for credit card customers and the merchants that swipe their cards.

Additionally, merchants would pay more, as Capital One would shift their debit card business to Discover’s network.

In implementing the Durbin debit card interchange fee cap, the Fed stipulated that networks like Discover’s are exempt since the issuer also acts as the card network with no technical interchange fee being charged between the two, meaning Capital One could charge merchants higher swipe fees compared to those running on Visa or Mastercard networks that are subject to the cap.

Moreover, there are serious financial stability concerns. This merger would result in a $625 billion bank – roughly$100 billion larger than the combined size of the three banks that failed last year, requiring emergency action to stabilize the banking system.

In closing, the Fed and the OCC must stop rubber stamping mergers. I urge you to follow the law and reject this merger.

Thank you very much.

Background:

In February 2024, Ranking Member Waters released a statement opposing Capital One’s Proposed Purchase of Discover.

In February 2024, Ranking Member Waters led 15 House Democrats in a letter urging the U.S. Department of Justice and our nation’s banking regulators, including the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency to move quickly to update their outdated bank merger review procedures in order to protect consumers from the continued trend of megabank mergers.

In July 2021, Congresswoman Waters released a statement on President Biden’s recent executive order encouraging the Department of Justice and prudential regulators to examine bank merger practices.

In July 2021, Congresswoman Waters encouraged Chair Powell to strengthen the Fed’s “outdated approach to bank mergers” during her opening remarks at a full Committee hearing entitled “Monetary Policy and the State of the Economy.”

In July 2021, Congresswoman Waters sent the following letter to Chair Powell urging him to heed President Biden’s encouragement to conduct more robust scrutiny of bank mergers, and pushing back against a recent news story indicating that the Fed planned to further weaken its approach to mergers.

In May 2021, Congresswoman Waters expressed alarm at a recent report that the Fed was rolling back bank merger review during her opening statement at a full Committee hearing entitled “Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions.”

In December 2020, Congresswoman Waters sent a letter to Jerome Powell, Chair of the Fed; Jelena McWilliams, Chairman of the FDIC; and Michael Hsu, Acting Comptroller of the Office of the Comptroller of the Currency (OCC), affirming the importance of these reviews and urging their agencies to impose a moratorium on approving any large bank M&A over $100 billion while these reviews take place.

In December 2020, Congresswoman Waters sent a letter to then President-Elect Joseph R. Biden urging his Administration to strengthen the merger and acquisition and anti-trust review processes.

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