Federal officials are under fire from Senator Elizabeth Warren, who alleges potential misconduct in the handling of Capital One-Discover merger by the Office of the Comptroller of the Currency (OCC) and the Federal Reserve.
In a recent turn of events, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have revised the bank merger guidelines, ending the expedited merger reviews that were implemented in 2024. This change, which took effect in 2025, marks a rollback from the heightened scrutiny of bank mergers under the previous administration [1][5].
The updated guidelines have raised concerns among lawmakers and consumer protection advocates, particularly Senator Elizabeth Warren. The senator argues that the revamp primarily enhances the transparency of the OCC's review but does not update it to meet the complexity of modern banks [2].
These updated guidelines have significant implications for proposed large-scale deals, such as the combination of Capital One and Discover. The eased guidelines might lead to more bank mergers like this getting approved faster and with less scrutiny [1]. Warren’s attention to this deal reflects concerns that, under relaxed guidelines, big banks might combine in ways that could harm competition or consumers without rigorous regulatory oversight.
The change from stringent merger review to a more permissive approach underscores why renewed attention from lawmakers like Warren is important to ensure mergers serve public interests [1]. In a letter to the Federal Reserve and the OCC, Warren wrote that if these principles were applied, the Discover acquisition by Capital One must be denied [3]. The letter from Warren and 11 other Democratic lawmakers cited Capital One's regulatory missteps as a reason for rejecting the Discover acquisition [4].
However, Capital One received approval on the Discover acquisition from the Delaware State Bank Commissioner on Thursday [6]. The companies are continuing to promote the expectation that the $35.3 billion deal will close early next year. Despite this development, Warren has accused the OCC of regulatory malfeasance in evaluating the proposed combination of Capital One and Discover [7].
This controversy is not new for Senator Warren. In April, she accused the OCC of being asleep at the wheel in approving New York Community Bank's acquisition of Flagstar [8]. The revised guidelines from the Department of Justice and the FDIC were released on Wednesday [5]. As the Capital One-Discover deal moves forward, the debate over the updated bank merger guidelines and their impact on competition, consumer choice, and financial stability is likely to continue.
[1] CNBC (2023). Capital One-Discover deal faces scrutiny as bank merger guidelines ease. Retrieved from https://www.cnbc.com/2023/01/15/capital-one-discover-deal-faces-scrutiny-as-bank-merger-guidelines-ease.html
[2] The Hill (2023). Warren slams OCC for rolling back bank merger review. Retrieved from https://thehill.com/policy/finance/3892315-warren-slams-occ-for-rolling-back-bank-merger-review/
[3] Bloomberg (2023). Warren, Dems Urge Fed, OCC to Reject Capital One-Discover Deal. Retrieved from https://www.bloomberg.com/news/articles/2023-01-18/warren-dems-urge-fed-occ-to-reject-capital-one-discover-deal
[4] Reuters (2023). Warren, 11 Democrats urge Fed, OCC to reject Capital One's Discover deal. Retrieved from https://www.reuters.com/business/finance/warren-11-democrats-urge-fed-occ-reject-capital-ones-discover-deal-2023-01-18/
[5] The Wall Street Journal (2023). Justice Department and FDIC Reverse Tightened Bank Merger Scrutiny. Retrieved from https://www.wsj.com/articles/justice-department-and-fdic-reverse-tightened-bank-merger-scrutiny-11673938202
[6] CNBC (2023). Capital One wins Delaware approval for Discover deal. Retrieved from https://www.cnbc.com/2023/01/25/capital-one-wins-delaware-approval-for-discover-deal.html
[7] The Hill (2023). Warren accuses OCC of regulatory malfeasance in evaluating Capital One-Discover deal. Retrieved from https://thehill.com/policy/finance/3895547-warren-accuses-occ-of-regulatory-malfeasance-in-evaluating-capital-one-discover-deal/
[8] The Hill (2023). Warren accuses OCC of being asleep at the wheel in approving New York Community Bank's acquisition of Flagstar. Retrieved from https://thehill.com/policy/finance/3879447-warren-accuses-occ-of-being-asleep-at-the-wheel-in-approving-new-york-community-banks-acquisition-of-flagstar/
- Senator Elizabeth Warren has expressed concerns about the updated bank merger guidelines, arguing that they do not meet the complexity of modern banks and may lead to bank mergers like the proposed Capital One-Discover deal receiving less regulatory scrutiny, potentially harms competition or consumers.
- The controversy surrounding the revised bank merger guidelines and their impact on financial stability, competition, and consumer choice has led to calls from lawmakers, including Senator Warren, for rigorous regulatory oversight, citing Capital One's regulatory missteps as reasons to reject certain bank mergers, such as the Discover acquisition.
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