Critics and supporters of Capital One Financial’s proposed acquisition of Discover Financial Services spoke out Friday during a public meeting held by bank regulatory agencies. 

Officials from the Federal Reserve and the Office of the Comptroller of the Currency; executives from Capital One and Discover; and about 150 members of the public were scheduled to speak at the all-day virtual meeting on the proposed $35.3 billion acquisition. The event, hosted by the Fed and OCC, also drew some 1,200 attendees at one point Friday morning.

If McLean, Virginia-based Capital One’s purchase of Riverwoods, Illinois-based Discover is approved by the Fed and OCC, the tie-up would create the largest credit card issuer in the U.S.

Chandni Ohri, director of community development at the OCC, informed attendees at the meeting’s outset that regulators were there “primarily to listen to you and your comments,” and panelists wouldn’t be answering questions on the proposed merger. 

During his comments, Capital One CEO Richard Fairbank sought to highlight the company’s history and its philosophy to “democratize banking,” underscoring efforts to provide credit cards to underserved populations and eliminate overdraft fees.

“We believe this acquisition advances financial stability and increases competition in the industry, while also providing significant new benefits in the communities in which we operate,” he said.

Still, the meeting drew vocal opponents to the deal, many of whom took aim at the idea of a bigger, more powerful Capital One and the detrimental effect that could have for consumers.

A slew of proponents of the deal also spoke Friday morning, highlighting the support their businesses, organizations or communities in various states have received from Capital One or Discover.

Community benefits plan eases concern for some, not others

A few of the speakers noted their concerns about the merger had been allayed by Capital One’s community benefits plan, announced Wednesday. 

The five-year, $265 billion community benefits plan, which Capital One said it developed in conjunction with a coalition of community groups, includes $35 billion to support affordable housing for low- and moderate-income communities and individuals; $600 million in capital for nonprofit community development financial institutions; and some $15 billion for small businesses, and businesses in low- and moderate-income communities.

Critics of the proposed merger, however, cast doubt on the plan and the company’s ability to follow through on it. Jesse Van Tol, CEO of the National Community Reinvestment Coalition, called it “a corporate phony baloney plan,” of which only $4.5 billion is “new money.” 

“This merger is a terrible, horrible, no good, very bad idea,” Van Tol said during the meeting. 

A July 18 letter to regulators signed by the NCRC and dozens of advocacy groups argued the merger “would further consolidate the credit card industry, reduce options for customers with lower credit scores, and give Capital One the ability and incentive to raise debit interchange fees.”

The risks of a larger Capital One

The deal would make Capital One the sixth-largest U.S. bank by assets, “greatly increasing risk for the entire financial system in the event of an economic downturn given their vulnerable and limited business model,” the groups said in their appeal to regulators. “Capital One’s business practices and merger history also call into question how this merger would serve the public’s convenience and needs.”

The deal doesn’t stand up to any of the “four prongs” of merger review established by the Bank Merger Act: the proposed tie-up’s effect on competition, safety and soundness, convenience and needs of communities served, or the risk to financial stability, the NCRC and other advocacy groups noted.

Rep. Maxine Waters, D-CA, ranking member of the House Financial Services Committee, also spoke Friday, urging regulators to reject the merger application. She warned Capital One may raise prices for consumers and lead to further consolidation in the industry.

The public comment period on the proposed merger is scheduled to end July 24. If the deal receives regulatory approvals, the companies have said they expect it to close toward the end of this year, or early next year.