Capital One Financial Corp. is aiming to become the largest credit-card issuer in the U.S. through a takeover of Discover Financial Services, in a combination that would test the Biden administration’s commitment to reining in the excesses of the financial-services industry, and economic concentration more broadly. Many analysts are predicting that regulators will bless the move because of the pro-competitive implications of Capital One
COF,
-1.73%,
one of the largest credit-card banks, buying Discover’s
DFS,
-2.43%
credit-card network.
See: Why Capital One plans to buy Discover in a megamerger of credit giants The combination of the two companies could boost the Discover network in its competition with Visa
V,
+0.59%
and Mastercard
MA,
+1.62%,
which some influential lawmakers have labeled a “duopoly” that preys upon the retail sector and American consumers with unreasonably high fees. But the merger would represent a union of two financial institutions that would create the nation’s sixth-largest bank by assets, according to Federal Reserve data. That means the Fed and the Office of the Comptroller of the Currency are legally required to determine whether the combination is in the public interest before approving it. “Do we really need another giant to add to the already significant suite of so-called too-big-to-fail banking institutions by elevating Capital One and Discover to that level?” said Saule Omarova, a Cornell Law School professor and onetime Biden nominee to head the OCC, in an interview. Omarova argued that federal laws require regulators to pay special attention to the risks of concentration in the banking industry, and not just because bank mergers can affect the stability of the financial system. “It’s high time that bank regulators began to appreciate how special banking is from an antitrust perspective,” she said, adding that the law encourages regulators to take a holistic view of the effect of a bank merger on the broader economy — including the “stability of the banking system and the responsiveness of the banking system to the needs of the real economy.” Omarova’s 2021 nomination to run the OCC was blocked by Republicans and centrist Democrats in the Senate who opposed her views on banking regulation. The agency, housed within the Treasury Department, is now run by an acting comptroller, Michael Hsu. From the archives (November 2021): Hostile hearing for Biden bank-regulator nominee Omarova: ‘I don’t know whether to call you professor or comrade,’ says Senate Republican Kennedy Key Words (October 2021): Biden’s banking watchdog pick once called finance ‘a quintessential a—hole industry’ Hsu is viewed skeptically by anti-monopoly activists like Matt Stoller of the American Economic Liberties Project, who see a division within the Biden administration over whether to be concerned about growing concentration in the banking industry — with Hsu, Treasury Secretary Janet Yellen and Fed officials being more open to bank merg …
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COF,
-1.73%,
one of the largest credit-card banks, buying Discover’s
DFS,
-2.43%
credit-card network.
See: Why Capital One plans to buy Discover in a megamerger of credit giants The combination of the two companies could boost the Discover network in its competition with Visa
V,
+0.59%
and Mastercard
MA,
+1.62%,
which some influential lawmakers have labeled a “duopoly” that preys upon the retail sector and American consumers with unreasonably high fees. But the merger would represent a union of two financial institutions that would create the nation’s sixth-largest bank by assets, according to Federal Reserve data. That means the Fed and the Office of the Comptroller of the Currency are legally required to determine whether the combination is in the public interest before approving it. “Do we really need another giant to add to the already significant suite of so-called too-big-to-fail banking institutions by elevating Capital One and Discover to that level?” said Saule Omarova, a Cornell Law School professor and onetime Biden nominee to head the OCC, in an interview. Omarova argued that federal laws require regulators to pay special attention to the risks of concentration in the banking industry, and not just because bank mergers can affect the stability of the financial system. “It’s high time that bank regulators began to appreciate how special banking is from an antitrust perspective,” she said, adding that the law encourages regulators to take a holistic view of the effect of a bank merger on the broader economy — including the “stability of the banking system and the responsiveness of the banking system to the needs of the real economy.” Omarova’s 2021 nomination to run the OCC was blocked by Republicans and centrist Democrats in the Senate who opposed her views on banking regulation. The agency, housed within the Treasury Department, is now run by an acting comptroller, Michael Hsu. From the archives (November 2021): Hostile hearing for Biden bank-regulator nominee Omarova: ‘I don’t know whether to call you professor or comrade,’ says Senate Republican Kennedy Key Words (October 2021): Biden’s banking watchdog pick once called finance ‘a quintessential a—hole industry’ Hsu is viewed skeptically by anti-monopoly activists like Matt Stoller of the American Economic Liberties Project, who see a division within the Biden administration over whether to be concerned about growing concentration in the banking industry — with Hsu, Treasury Secretary Janet Yellen and Fed officials being more open to bank merg …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]