“Why add to the pile of too-big-to-fail banks?” he asked. “There seems to be this fast-tracking, let’s-get-this-done mentality at the Federal Reserve, but we need to slowdown the process long enough to allow for adequate public input.”
NCRC is calling on the Federal Reserve to hold five public hearings and extend the 30-day comment period, slated to end August 22, to thoroughly suss out the risks and benefits of the merger.
Though the agency rarely hosts public meetings on such matters these days, Adam Drimer, assistant vice president of the Federal Reserve of Richmond, said it is taking the nonprofit’s request under consideration.
Gerald Hanweck, professor of finance in the School of Management at George Mason University, said regulators must carefully study the deal’s impact on competition in local markets.
“Throughout the country this is going to have ramifications,” he said. “These types of consolidations have really limited competition in many areas: credit cards, mortgages.”
Along with his apprehension about the mushrooming size of Capital One, Taylor questions the bank’s commitment to providing capital to under-served communities. NCRC previously filed a complaint with the U.S. Department of Housing and Urban Development alleging the bank has discriminated against low- to moderate-income loan applicants, violating fair lending laws.
Capital One spokesperson Pam Girardo said in an e-mail that NCRC’s “allegations are entirely without merit,” and the bank is “fully committed” to fair lending practices.
In Capital One’s most recent assessment under the Community Reinvestment Act, which judges financial institutions’ efforts to provide credit to low- to moderate-income communities, the bank received a “satisfactory” rating, according to data from the Office of the Comptroller of the Currency. That evaluation was conducted in 2007.
“We have a range of programs and partnerships intended to facilitate lending and homeownership opportunities for genuinely qualified buyers,” Girardo stated. “Over the past five years, we have provided over $9 million in grants to support affordable housing.”
When Capital One said in June it would acquire the online banking arm of Dutch financial services firm ING Groep NV, the loudest cries of dissent could be heard from ING Direct customers. Many questioned whether the behemoth credit card company would uphold ING’s low-fee, low-maintenance banking model.
Girardo said Capital One is still working through the best way to merge its online banking system with that of ING Direct, but said the company would continue to bring the customer experience ING clients have “come to know and expect.”
Taylor doubts that assurance, especially as it pertains to low-income customers, who would be of little value to Capital One. The bank, he said, needs to be “explicit about how it will ensure that working-class people still have access to their products and services.”
He suggests regulators can address such concerns by attaching stipulations to their approval.