U.S. Senator Josh Hawley (R-MO) sent a letter to Department of Justice Assistant Attorney General for the Antitrust Division Jonathan Kanter, urging him to block the merger between Capital One and Discover Financial Services.
“This is destructive corporate consolidation at its starkest. If consummated, this merger will create a new juggernaut in the credit card market, with unprecedented powers to extort American consumers. That cannot be allowed to happen,” wrote Senator Hawley.
With Charge Offs Soaring, Capital One To Buy Discover, Creating Credit Card Giant https://t.co/IxD4ES9h0C
— zerohedge (@zerohedge) February 19, 2024
On Wednesday, Senator Hawley condemned the Capital One-Discover merger and also renewed his push to cap credit card interest rates at 18% to provide relief for working Americans.
On February 19, Capital One, one of America’s largest and most powerful banks, announced its plans to acquire Discover Financial Services for $35 billion, bringing 300 million Discover card users into its existing fold of 100 million customers. As the Wall Street Journal reported, this merger will create the third largest credit-card issuer by purchase volume and the sixth largest U.S. bank by assets,” Hawley wrote in the letter.
“This is destructive corporate consolidation at its starkest. If consummated, this merger will create a new juggernaut in the credit card market, with unprecedented powers to extort American consumers. That cannot be allowed to happen,” he continued.
Sen. Elizabeth Warren (D-MA), a longtime proponent of tighter financial regulation, also called for federal officials to block the deal.
“The merger of CapitalOne and Discover threatens our financial stability, reduces competition, and would increase fees and credit costs for American families,” Warren posted on X.
If it goes through, the deal could further whittle down customer’s options to shop around for the best credit card.
“Consumers would always rather have more options because more competition is generally better,” said Matt Schulz, Chief Credit Analyst at LendingTree.
“If Capital One sees that there’s a bunch of overlap between what they have and what Discover brings to the table, and they want to combine the two instead of keeping them as separate brands, you could end up seeing some of those offers get reduced,” he added.
The average credit card interest rate in the U.S. is 25%, according to LendingTree, the highest since the credit marketplace began tracking monthly rates in 2019.
The Federal Reserve Bank of New York said earlier this month that credit card debts entering serious delinquency jumped from 4% to over 6% from the last quarter of 2022 to the same period the previous year when total consumer debt hit a whopping $17.5 trillion.
