| On Capital
One Discover Opposition by
Fair Finance Watch with Inner
City Press on FOIA
by
Matthew R. Lee
SOUTH
BRONX, July
19 – Capital One has applied
to buy Discover, in an
anticompetitive deal that
should be rejected by
regulators if they mean what
they have been saying. After
they applied late March
20, Inner City Press
submitted a second Freedom of
Information Act request to the
Office of the Comptroller of
the Currency (and to the
Federal Reserve).
On May 14 - still
without providing FOIA
documents - the OCC and Fed
set a July 19 virtual public
meeting.
On the eve of it,
Capital One announced a vague
and less than credible plan -
they previously violated their
ING Direct pledge - including
this time $75 billion in
largely subprime auto loans.
Fair Finance
Watch testified, with Inner
City Press on the FOIA:
This proposal is
anticompetitive, and Capital
One is making a mockery of the
Community Reinvestment Act,
with an absurdly small CRA
assessment area and now, at
the 11th hour, a cynical
pledge that includes $75
billion in subprime, often
predatory car lending.
How
much of this last minute
pledge would in fact be
subprime? At what interest
rates? The regulators should
ask, today - and must extend
the comment
period.
You have and will hear from
colleagues about the ongoing
lending disparities. I want to
focus in my three minutes on
the lack of transparency, and
the regulatory agencies' role
in it.
The day
the banks announced the
proposed merger, Inner City
Press submitted Freedom of
Information Act requests to
both the Federal Reserve and
the Office of the Comptroller
of the
Currency.
The Fed,
as has become a pattern,
granted Inner City Press' FOIA
request expedited treatment -
and then did not provide any
of the responsive documents,
claiming it needed more
time. The
OCC did at least respond to
the FOIA request - but it
withheld, in full, 193 out of
210 responsive
pages.
From what
was released, it shows three
meetings with Capital One and
the OCC in February and March,
right before the start of the
public comment period.
An OCC email says "the purpose
of this meeting is to get
everyone on the same page out
of the gate" in response to an
email from Capital One's
lawyer. This is called
regulatory capture. Can you
say, What's in your
wallet?
...The
Philadelphia National Bank
case of the Supreme Court,
unlike the Chevron deference
relied on not yet overrule,
stated that "a merger which
produces a firm controlling an
undue percentage share of the
relevant market, and results
in a significant increase in
the concentration of firms in
that market, is so inherently
likely to lessen competition
substantially that it must be
enjoined in the absence of
evidence clearly showing that
the merger is not likely to
have such anticompetitive
effects." 374 U.S. 321 at
363.
Here, the
presumption has not been
rebutted - quite the contrary,
given Capital One's rogue and
predatory ways, going back to
its acquisition of ING Direct
and beyond. On the
current record, this proposed
merger must be rejected.
Capital One's application for
regulatory approval must be
denied. My
concludes my remarks, but not
my FOIA requests
On June 25 the
OCC belatedly responded to
Inner City Press' FOIA request
- by withholding in full 185
pages. OCC FOIA production on
DocumentCloud here.
Inner City Press appealed.
At the July 19
public meeting, "each speaker
will be allotted three minutes
to speak at the meeting," the
OCC and Fed on July 9 said.
Meanwhile Capitol
One lobbying continues, for
example with a Pennsylvania
state legislator extolling
Capital One's subprime,
here.
The OCC
put part of its application in
its reading room. And it is an
outrage, Capital One gaming
the CRA system. For example
"the Proposed Transaction
would result in CONA
establishing a new assessment
area in Delaware, which
will include all census tracts
in Sussex County and seven
contiguous census tracts
in Kent County."
That for a
nationwide card and subprime
auto lender...
As
documented by Fair Finance
Watch, Discover Bank in 2022
denied mortgage loans
application from African
Americans more than twice as
frequently as those of
whites.
Previously, Inner City Press
and NCRC challenged Capital
One's acquisition of ING
Direct, see here.This
time, given the antitrust
enforcement claims being made
in DC, this proposal should be
dead in the water. Watch this
site.
***
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