Since February 2024, Capital One has been working to acquire Discover in an all-stock transaction valued at $35.3 billion. The merger would create the largest U.S. credit card issuer, surpassing industry leaders like JPMorgan Chase and Citigroup.
But the deal is running into headwinds in Congress and the New York Attorney General's office.
In Congress, Elizabeth Warren (D-Mass.) Reps. Alexandria Ocasio-Cortez (D-N.Y.) wrote to the Office of the Comptroller of the Currency (OCC) and the Federal Reserve, complaining of what they called Capital One’s history of consumer abuses.
“[W]e write to bring your attention to Capital One’s record of corporate misconduct, including a newly-revealed pattern of robo-signing affidavits in its aggressive credit card debt lawsuits,” they said.
Since 2000, Capital One has accumulated nearly $1 billion in fines for a range of illegal corporate behavior: ripping off consumers, discriminatory job postings, and “egregious” violations of anti-money laundering requirements, they wrote.
“Capital One’s egregious failures allowed known criminals to use and abuse our nation’s financial system unchecked, fostering criminal activity and allowing it to continue and flourish at the expense of victims and other citizens,” according Kenneth Blanco, director of the Financial Crimes Enforcement Network (FinCEN).
Antitrust issues in New York
New York Attorney General Letitia James is investigating whether Capital One's proposed $35.3 billion takeover of Discover Financial Servicesviolates the state's antitrust law.
James asked a state judge in Manhattan in court filings on Wednesday to subpoena Capital One for documents needed for her probe, citing the bank's alleged lack of cooperation.
James said a merger could have a significant impact in New York because Capital One and Discover respectively have more than $9.5 billion and $6.5 billion of credit card loans there.
A "seedy" history
In their letter, the Congressmembers said Capital One has "a seedy history" of collecting debts through illegal harassment and has engaged in harmful practices such as “robo-signing” legal statements representing consumer debt amounts, spending “less than two minutes reviewing each affidavit” in lawsuits against credit card customers, according to an investigation by Capitol Forum, an investigative news organization.
The lawmakers wrote: “Though the facts of each affidavit are legally required to be thoroughly reviewed and confirmed by the signer, former employees admitted that ‘workers could get overwhelmed by the sheer volume and sign some affidavits with wrong debt amounts.’” If Capital One’s acquisition of Discover is approved, Capital One would inherit more than 300 million new customers, subjecting hundreds of millions of people to these abusive practices.
“Capital One’s history of failures to meet its acquisition-related commitments, its consumer protection and BSA/AML violations, and its aggressive debt collection and robo-signing practices highlight a pattern of regulatory non-compliance and consumer harm,” concluded the lawmakers.
“As you consider Capital One’s application to acquire Discover and its 300 million cardholders, we ask that you thoroughly review the facts of these abuses.”
The deal remains in doubt
Following the re-election of President Donald Trump in November 2024, both Capital One and Discover experienced significant stock price increases, reflecting investor optimism that the new administration might adopt a more lenient regulatory stance toward large mergers.
However, the merger's completion remains uncertain, contingent on approvals from federal and state regulators, as well as the resolution of ongoing legal challenges and objections from Congressional critics and consumer protection agencies.
The letter is also signed by Katie Porter (D-Calif.), Raúl Grijalva (D-Ariz.), James McGovern (D-Mass.), Cori Bush (D-Mo.), Greg Casar (D-Texas), Summer Lee (D-Pa.), Sylvia Garcia (D-Texas), Rashida Tlaib (D-Mich.), Jesus G. “Chuy” Garcia (D-Ill.), and Al Green (D-Texas).