Sen. Elizabeth Warren (D-MA) is calling for federal regulators to stop Capital One from buying its competitor Discover, calling the deal “dangerous.”
The all-stock deal was announced on Monday. The massive buyout would cost $35 billion and result in the largest U.S. credit card company by loan volume. While shares of Discover surged in response to the news, some, like Warren, said such a merger would be anti-competitive.
“The merger of [Capital One] and [Discover] threatens our financial stability, reduces competition, and would increase fees and credit costs for American families,” Warren said on social media. “This Wall Street deal is dangerous and will harm working people.”
“Regulators must block it immediately,” she added.
The merger must face the scrutiny of Biden administration regulators. The Biden administration has made antitrust concerns a priority.
When contacted by the Washington Examiner about the deal, the White House pointed to ambiguous comments that Director of the National Economic Council Lael Brainard made during a Tuesday appearance on CNBC.
Brainard said that while she can’t speak about the Capital One-Discover deal specifically, President Joe Biden is “very committed to restoring competition across the landscape in the United States.”
“For too long, we saw a lot of consolidation, which did not have benefits but rather came at some cost,” Brainard added. “And so, we’ve really seen a reinvigoration of the commitment to competition, which levels the playing field for small businesses.”
Just last month, a federal judge in the district of Massachusetts blocked a $3.8 billion deal that would have involved JetBlue Airways buying Spirit Airlines, the sixth- and seventh-largest airlines in the U.S., respectively. Spirit is known as a budget airline.
The judge said that if the deal went through, “consumers that rely on Spirit’s unique, low-price model would likely be harmed.”
Justice Department officials, such as Attorney General Merrick Garland, praised the ruling. The Biden Justice Department had filed a civil lawsuit to block the JetBlue-Spirit buyout from taking place.
Richard Fairbank, founder and CEO of Capital One, has expressed optimism that regulators will give the acquisition the green light.
In a Monday statement, he called the merger a “singular opportunity to bring together two very successful companies with complementary capabilities and franchises, and to build a payments network that can compete with the largest payments networks and payments companies.”
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“We believe that we are well positioned for approval, but of course, we can’t discuss our conversations with our regulators,” Fairbank said on a Tuesday call with investors.
If the merger isn’t blocked, Capital One predicts, the transaction will end up closing toward the end of this year or in early 2025.
