The proposed $35 billion acquisition of Discover Financial Services by Capital One Financial Corp. has drawn scrutiny from New York Attorney General Letitia James. The deal, which has already captured federal attention, is being investigated for its potential impact on the state’s consumers. The New York Attorney General’s office has expressed concern about the merger’s ramifications, emphasizing its potential influence on credit cardholders in the region.
Letitia James, in her request for judicial approval to issue subpoenas, indicated the state would be significantly impacted by this merger. With Capital One and Discover holding over $16 billion in combined credit card loans within New York, this transaction is set to create the largest credit card issuer, boasting $250 billion in aggregate outstanding credit card loans. James has further highlighted that Capital One is a leading issuer to consumers with subprime credit scores, potentially complicating financial products for these consumers.
The U.S. Department of Justice has already been scrutinizing this proposed transaction. While Discover Financial Services has agreed to a waiver permitting information exchange between the Justice Department and the New York Attorney General’s office, Capital One has declined to do so, citing federal banking regulations as the constraint to voluntary cooperation, despite the state’s assertion that these regulations do not preclude subpoena compliance.
Capital One, in response to these inquiries, maintains confidence that its merger with Discover will secure regulatory approval, ultimately benefiting consumers. This merger, announced in February, stands as the largest globally at the time, and was described by Capital One CEO Richard Fairbank as an opportunity for both companies to challenge significant payment networks.
The defensiveness regarding the transaction from Capital One comes amid Democratic senators’ reservations earlier this year. Notably, Senator Sherrod Brown, chairman of the Senate Banking Committee, and Senator Elizabeth Warren have voiced criticisms regarding the size and scope of the merger.