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Senate Majority Leader Raises Concerns Over Capital One’s Discover Acquisition

 |  April 9, 2024

Senate Majority Leader Chuck Schumer has voiced concerns regarding Capital One’s proposed acquisition of Discover, expressing fears that the merger could lead to increased costs for credit card users, per NY Daily News.

In a statement released on Sunday, the New York Democrat highlighted his concerns, stating, “First, many cardholders may not even know these companies might become one — and they should. Second, less competition in the credit card marketplace could mean higher interest rates for these cardholders, bigger fees, higher penalties and so much more.”

Capital One announced its intentions to absorb Discover back in February, citing the potential benefits of combining their resources. The merger is poised to create a financial powerhouse, with Capital One committing a $35 billion to forge a company that could surpass industry giants like JPMorgan Chase and Citigroup to become the largest credit card loans provider in the United States.

According to Capital One’s projections, the union of the fourth and sixth largest charge card providers in the nation will translate into increased sales for merchants and improved deals for consumers and small businesses alike.

Read more: CapOne Informs Regulators $35.3 Billion Deal with Discover Aims to Boost Competition

Schumer’s concerns, however, revolve around the potential adverse effects on consumers. In his efforts to seek transparency, Schumer’s office reached out to both Capital One and Discover to discuss the issue, but they received no response. As a result, Schumer sent a letter to executives of both companies, urging them to provide clarity on the matter before finalizing the deal.

Angelo Roefaro, spokesman for Schumer, emphasized the senator’s proactive stance, stating, “Among the senator’s inquiries was whether the newly formed company plans to fire employees. Schumer also wants a breakdown of interest rates charged to consumers over the past decade with regards to race and where they live.” Schumer has requested a response from the companies no later than April 21.

The potential consequences of the Capital One-Discover merger have sparked widespread debate, with advocates of the deal emphasizing its potential benefits for businesses and consumers, while critics like Schumer raise concerns over the ramifications of reduced competition in the credit card marketplace.

Source: NY Daily News