The $9 billion Capital One purchase of the ING Groep NV’s (ING, INGA.AE) U.S. online-banking unitwas aimed to boost fifth-largest U.S. commercial bank by deposits.
Considering this is the biggest bank merger deal since the financial crisis of 2008, it has caught the eyes of many community groups` concerned about banks becoming too powerful. For quite a long time Capital One has put off the news of the bank coupling due to the publicity surrounding the deal and direct calls from legislators such as Rep. Barney Frank about the consequences of the merger.
Capital One was also looking to purchase HSBC in a separate endeavor, but the sale did not go through due to similar attacks. According to an authoritative banking group called Independent Community Bankers of America, before approving any big bank deals the rules from Dodd-Frank should first be adjusted.
At Capital One`s credit card operations meeting Rev. Jesse Jacksonreleaseda statement declaring that credit cards would be much more pricy for vulnerable acquirers if banks get millions more in deposits.
Jackson, founder and president of civil rights group Rainbow PUSH Coalition stated: “As Capital One vacuums up safe bank deposits, it spits out higher risk credit cards. It is clear that Capital One has no commitment to legitimate community banking.”
Before the deal, Capital One has also been accused for not doingenough in home lending in lower income areas, as well as refusing to issue subprime mortgages. On the other hand, Capital One assures the public that its credit card lending is absolutely safe and that it doesn`t see subprime mortgages as financially sound banking.
Along with that, Capital One also pledged a promise of massive donations. The bank is now supposed to invest $180 billion over the next ten years in to low and moderate-income communities.
By making this move, the bank gained the approval of the House Financial Services Committee Chairman Spencer Bachus, who hurried Fed Chairman Ben Bernanke to approve the deal between Capital One and ING.
Credit-Land.comeditor-in-chiefMichael Germanovsky supported the public expectation for an approval, assuming the deal will help Capital One make more consumer loans in its credit card operations. In an interview, Germanovsky said: “This is the first time that the Federal Reserve has used the new legislation delegated by the Dodd-Frank financial reforms for examining banking deals. It was believed that the rules set forth by the Dodd-Frank amendment were aimed at making megabanks extinct.” – said Germanovsky. – “None the less, this approval may create a good opportunity for banks looking to expand in the coming years.”