The Federal Reserve announced Friday it would extend the public comment period on Capital One’s proposed acquisition of ING Direct, more than a week after Rep. Barney Frank and consumer groups urged the Fed to put the brakes on the deal that would create the nation’s fifth largest bank.
Public comment on the deal between McLean-based Capital One and the U.S. online banking unit of Dutch-owned ING Groep NV will be extended from Aug. 22 to Oct. 12. The Fed also will hold public meetings in Washington, Chicago and San Francisco to seek input on the merger’s potential effects on consumers.
In a letter sent to Fed Chairman Ben S. Bernanke this month, Frank (D-Mass.) had called for extended comment and hearings, echoing similar concerns of the coalition of 18 consumer and housing groups that questioned whether the merger would create a “too big to fail” bank.
The proposed $9 billion acquisition, announced in June, would boost Capital One from the eighth-largest to the the fifth-largest bank in the United States.
“For this reason alone, care should be taken to thoroughly examine the impact of this purchase with respect to the consolidation of banking assets, the provision of credit by the resulting bank, and compliance with the Community Reinvestment Act,” Frank wrote in a letter dated Aug. 17.
Capital One said complaints that the acquisition would create a “too big to fail” institution are baseless. Capital One and ING combined would hold only about 1 percent of total liabilities of all U.S. insured depository organizations, and 1.52 percent of total deposits, Capital One spokeswoman Tatiana Stead said.
Local analysts questioned the purpose of extending the public comment period.
“What’s the point of another 60 days of comment?” said Bert Ely, a consultant at Ely & Co. “Those who don’t like the deal have had ample time to comment . . . . What’s not clear to me is what he’s trying to accomplish other than to kill the deal.”
Ely said there may be the only potential buyer for ING Direct, which the European Union required ING to sell in order to receive aid during the financial crisis .— and Capital One is as good an option as any to absorb the online banking unit.
“ING has to sell its U.S. operations and it’s going to have to be a big buyer, given the size of ING,” he said. “If Capital One doesn’t buy it, who does? ‘First National Bank of Podunk’ isn’t going to be a buyer.”