Democrats Ask Fed to Rethink Approval of Capital One-Discover Merger

Democratic lawmakers want the Federal Reserve to reconsider its approval of Capital One’s purchase of Discover.

In a letter to the central bank Friday (May 2), Rep. Maxine Waters of California and Sen. Elizabeth Warren of Massachusetts argued that the decision to “rubber stamp” the merger would harm consumers and small businesses.

“Merchants would have no choice but to accept the terms dictated by Capital One’s network, since they need to access the customers of the largest credit card issuer in the country,” the letter says.

“The market power created by combining Capital One’s card base with Discover’s network explains why Capital One CEO Richard Fairbank described the acquisition of the network as a ‘holy grail.’”

Warren and Waters are the top Democrats on the, respectively speaking, Senate Banking, Housing, and Urban Affairs Committee and House Financial Services Committee.

The lawmakers also contend that the Federal Reserve failed to consider several recent developments, such as the economic impact of White House tariffs, the Department of Government Efficiency (DOGE)’s involvement with the Federal Deposit Insurance Corporation (FDIC), new data on credit card stress, and efforts by the Republicans to shutter the Consumer Financial Protection Bureau (CFPB).

They wrote that the Fed was “creating the largest credit card issuer in the country at the very moment the Trump administration is attempting to shut down the only agency with legal authority to regulate, supervise, and enforce federal consumer financial laws against the combined entity.”

Capital One announced plans for the $35.3 billion merger last year. The Fed approved the deal last month, while the U.S. Department of Justice — after initially concluding that the merger would harm competition — has decided to let the purchase go forward.

The deal is expected to become final on May 18.

Discussing the merger during Capital One’s most recent earnings call, Fairbank said the combined entity will create a “leading consumer banking and payments platform.”

Later in the call, the CEO noted that “Discover brings us a growth platform both on the network side and with respect to their card franchise that allows us to preserve the best of what they do and leverage a lot of Capital One’s capabilities.”

In discussing the acquisition, Fairbank spotlighted what he said would be “unique capabilities, modern technology, powerful brands and a customer franchise of over 100 million customers that spans the marketplace … combining proven and complementary banking and credit card businesses with a global payments network.”