The Fed seemed to give credence to these concerns by extending the comment period on the proposed deal and adding three public meetings to discuss the potential impact on customers. About 575 people and groups denounced the merger during the comment period, and 340 others came out in support.
Consumer groups were encouraged by the public forum and the agency’s repeated delays in handing down a decision, which they viewed as a sign of dissent among the five governors, according to NCRC.
“They certainly created hope,” said John Taylor, chief executive of the coalition. “But we didn’t have any illusions that an approval wasn’t the probable outcome.”
He said NCRC is considering appealing the decision and boycotting Capital One, which finalized the acquisition Feb. 17. Taylor, nonetheless, praised the Fed for “mindful deliberations that raised the bar on how it deals with whether there’s a public benefit and whether a bank is worthy of acquiring other institutions.”
Charged under the Dodd-Frank law with examining the merger’s threat to the stability financial system, the central bank concluded there was little cause for concern. Sure, the combined company will have large credit card and consumer banking divisions. But Capital One, unlike many of its peers, has steered clear of the type of complex financial transactions that crippled other firms.
Consent did come with conditions. The Fed is giving Capital One 90 days to devise a plan to enhance its risk-management and compliance controls as a larger company. It also ordered the bank to tweak internal controls for debt-collection and lending in response to consumer complaints.
“The board should have been more specific in their conditions about how the bank was going to serve underserved populations, and specifically about the kinds of programs it would engage in,” Taylor said. “The devil is in the details, and they left a lot of the details out.”
In its 40-page order, the Fed pointed out that Capital One’s record on lending to low-income and minority borrowers generally exceeds that of its competitors. Moreover, the bank received an “outstanding” rating at its Community Reinvestment Act performance evaluation in April.