New federal guidelines calling for stricter reviews of bank deals are likely to present fresh hurdles for Capital One Financial Corp.’s pending $35 billion acquisition of Discover Financial Services. Announced in February, the tie-up would create the sixth-largest bank by assets and the largest credit card issuer in the US based on outstanding loans.
However, a set of merger policies announced on Sept. 17 by the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC), and the Justice Department’s antitrust division signal that federal regulators are ratcheting up their scrutiny of the deal, which has already been under extensive review.
Michael Barr, vice chair for supervision at the US Federal Reserve, Martin Gruenberg, chairman of the FDIC, and Michael Hsu, acting director of the OCC, highlighted these changes during a House Financial Services Committee hearing held on May 15, 2024. The broader implications of this regulatory overhaul could set a precedent for future bank mergers, potentially reshaping the landscape of financial industry consolidations.