The news of credit card giant Capital One acquiring Discover has caused politicians on both sides to try to prevent the merger from happening to save consumers from losing more money.
Sen. Josh Hawley (R-MO) sent a letter to Assistant Attorney General Jonathan Kanter on Wednesday to block the deal.
“This is destructive corporate consolidation at its starkest,” Hawley wrote. “If consummated, this merger will create a new juggernaut in the credit card market, with unprecedented powers to extort American consumers. That cannot be allowed to happen.”
Sounds like the credit card companies finding another way to screw the American people. This merger should be blocked – and Congress ought to cap credit card rates pronto https://t.co/5l2vuG3qjH
— Josh Hawley (@HawleyMO) February 21, 2024
He also stated that credit card interest rates were already out of hand. According to CNBC, the average credit card consumer paid 22.8% by the end of 2023, a record high.
The senator also wanted to keep credit card interest rates at 18% to relieve American consumers of the high interest rates that put many of them further into debt.
Last September, he introduced the Capping Credit Card Interest Rates Act to put it into law.
Joe Biden is putting the screws to working people in America. They need relief. Capping credit card interest rates will provide it pic.twitter.com/DO9L9GaRNv
— Josh Hawley (@HawleyMO) September 14, 2023
Capital One announced its acquisition via press release on Monday.
“Our acquisition of Discover is a singular opportunity to bring together two very successful companies with complementary capabilities and franchises, and to build a payments network that can compete with the largest payments networks and payments companies,” Capital One founder, chairman and CEO Richard Fairbank said, according to the press release.
The press release also notes that Discover shareholders would receive 1.0192 Capital One shares for each Discover share. The total represents a premium of 26.6% which is based on Discover’s Feb. 16 closing price of $110.49.
On the left, Sen. Elizabeth Warren (D-MA) also called for dismantling the merger, writing in a post on X that the merger “threatens our financial stability” and “will harm working people.”
The merger of @CapitalOne and @Discover threatens our financial stability, reduces competition, and would increase fees and credit costs for American families.
This Wall street deal is dangerous and will harm working people.
Regulators must block it immediately.
— Elizabeth Warren (@SenWarren) February 20, 2024
According to analysts, the deal could be a game changer. As of now, the payment industry is dominated by Visa and Mastercard. If Capital One’s acquisition of Discover goes through, it could change the competition.
Capital One reported that the deal is expected to be complete by the end of the year or early 2025.
