Consumer groups consider next move in wake of Fed’s Capital One decision

Earlier this month, the Federal Reserve approved Capital One Financial’s $9 billion acquisition of ING Direct. (Mark Lennihan/AP)

Consumer advocates are weighing whether to appeal the Federal Reserve’s decision to approve Capital One Financial’s $9 billion acquisition of ING Direct, after organizing months of protests against the deal.

An alliance of consumer groups, led by the District-based National Community Reinvestment Coalition, waged an eight-month campaign to stop the merger saying it would create another too-big-too-fail behemoth. The opposition also accused McLean-based Capital One of failing to provide capital to underserved communities, negligence they felt would be exacerbated if the bank grew larger.

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.



Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Show Comments
Most Read Business



Success! Check your inbox for details.

See all newsletters

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.