Approval of Capital One’s proposed acquisition of Discover would generate just $5 billion for neglected communities, the National Community Reinvestment Coalition (NCRC) wrote in a comment letter ahead of Wednesday’s deadline, noting that is approximately 2% of the amount the banks have claimed is waiting to be unleashed if regulators bless the marriage.
“98% of the money the plan frames as merger-contingent is in fact already part of the two separate banks’ existing baseline activities or plans,” NCRC’s letter states. “Just $4.9 billion of the $265.2 billion referenced in the [bank plan] represents new spending, lending or philanthropy that would not happen without the merger.”
Capital One itself does not characterize the $200 billion in credit card and auto lending as newly extended credit. Of the remaining $65 billion figure touted in the bank’s materials, based on current five-year baselines and previously planned activities noted in the CBP, the two separate banks are already providing:
- $43.9 billion out of the $44 billion in community development lending and investments
- $12.9 billion out of the $15 billion in small business lending
- $2.9 billion out of the $5 billion in supplier diversity initiatives
- $100 million out of the $600 million in CDFI support
- $442 million out of the $575 million in philanthropy
“$5 billion is an insultingly small tip to leave on a quarter-trillion-dollar tab,” said Jesse Van Tol, President and CEO of NCRC. “The premise of Capital One’s so-called ‘Community Benefits Plan’ is that these things will happen if regulators give them what they want, but the reality is almost all these things will happen even if regulators protect the American people from a dangerously large megabank that will bully small businesses and lower-income families to squeeze out even larger profits. The bank’s deceitful presentation should make this a no-brainer for the Fed and the OCC.”
The full text of the new comment letter can be found here.
