Warren, Ocasio-Cortez, Lawmakers Warn Regulators of Capital One’s Abusive Past Ahead of Proposed Acquisition of Discover

Warren, Ocasio-Cortez, Lawmakers Warn Regulators of Capital One's Abusive Past Ahead of Proposed Acquisition of Discover

Lawmakers Have Called for Regulators to Block Massive Bank and Credit Card Merger

"Capital One's history of failures … highlight a pattern of regulatory non-compliance and consumer harm. As you consider Capital One's application to acquire Discover and its 300 million cardholders, we ask that you thoroughly review the facts of these abuses."

Text of Letter (PDF)

Washington, D.C. - U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Banking, Housing, and Urban Affairs Committee, and U.S. Representatives Alexandria Ocasio-Cortez (D-N.Y.) led their colleagues in warning the Office of the Comptroller of the Currency (OCC) and the Federal Reserve (Fed) of Capital One's history of consumer abuses ahead of its proposed acquisition of Discover Financial Services (Discover).

"As you consider Capital One Financial Corporation's (Capital One) proposed acquisition of Discover Financial Services (Discover), we write to bring to your attention to Capital One's record of corporate misconduct, including a newly-revealed pattern of robo-signing affidavits in its aggressive credit card debt lawsuits," wrote the lawmakers.

Since 2000, Capital One has accumulated nearly one billion dollars in fines for a range of illegal corporate behavior: ripping off consumers, discriminatory job postings, and "egregious" violations of anti-money laundering requirements. According to FinCEN Director Kenneth Blanco, "Capital One's egregious failures allowed known criminals to use and abuse our nation's financial system unchecked, fostering criminal activity and allowing it to continue and flourish at the expense of victims and other citizens."

Additionally, Capital One has a seedy history of collecting debts through illegal harassment and has engaged in harmful practices such as "robo-signing" legal statements representing consumer debt amounts, spending "less than two minutes reviewing each affidavit" in lawsuits against credit card customers, according to an investigation by Capitol Forum. The lawmakers wrote: "Though the facts of each affidavit are legally required to be thoroughly reviewed and confirmed by the signer, former employees admitted that 'workers could get overwhelmed by the sheer volume and sign some affidavits with wrong debt amounts.'" If Capital One's acquisition of Discover is approved, Capital One would inherit more than 300 million new customers, subjecting hundreds of millions of people to these abusive practices.

"Capital One's history of failures to meet its acquisition-related commitments, its consumer protection and BSA/AML violations, and its aggressive debt collection and robo-signing practices highlight a pattern of regulatory non-compliance and consumer harm," concluded the lawmakers. "As you consider Capital One's application to acquire Discover and its 300 million cardholders, we ask that you thoroughly review the facts of these abuses."

The letter is also signed by Katie Porter (D-Calif.), Raúl Grijalva (D-Ariz.), James McGovern (D-Mass.), Cori Bush (D-Mo.), Greg Casar (D-Texas), Summer Lee (D-Pa.), Sylvia Garcia (D-Texas), Rashida Tlaib (D-Mich.), Jesus G. "Chuy" Garcia (D-Ill.), and Al Green (D-Texas).

Senator Warren has fought to crack down on financial industry consolidation that threatens consumers and prices:

• In March 2024, Senator Elizabeth Warren (D-Mass.) published an op-ed in the Wall Street Journal calling on federal regulators to block Capital One's merger with Discover.
• In February 2024, Senator Elizabeth Warren (D-Mass.) urged the Office of the Comptroller of the Currency (OCC) and the Federal Reserve (Fed) to block Capital One's plan to acquire Discover Financial Services (Discover). The letter also expressed concerns with the OCC's proposed policy statement regarding merger approvals as essentially codifying a permissive approach.
• In December 2023, Senator Warren led 6 senators in a letter to Acting Comptroller of the Currency Michael Hsu, calling on OCC to allow states to move forward with their efforts to protect consumers from harmful bank practices. The senators criticized the OCC for overstepping its preemption authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which the agency is abusing to block tough, state-level consumer protections.
• In August 2023, chairing a hearing of the Senate Banking, Housing, and Urban Affairs Committee Subcommittee on Economic Policy, Senator Warren highlighted the need for regulators to implement the strongest version of bank merger review guidelines in order to ensure stability in the financial system.
• In June 2023, Senator Warren sent a letter to Assistant Attorney General Jonathan Kanter, Federal Deposit Investment Corporation (FDIC) Chairman Gruenberg, Acting Comptroller of the Currency Hsu, Federal Reserve Vice Chair for Supervision Michael Barr, and Treasury Secretary Janet Yellen, urging regulators to promote greater competition in the banking sector by toughening their stances on bank mergers and strengthening bank merger review guidelines.
• In May 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren questioned Acting Comptroller Hsu on his decision to approve JPMorgan Chase's purchase of First Republic Bank after its collapse. This merger allowed a large, poorly supervised bank to be swallowed by America's largest bank, making it $200 billion larger than it was before.
• In May 2023, Senator Warren sent a letter to Acting Comptroller Hsu and FDIC Chair Gruenberg, questioning the terms of the sale of First Republic Bank to JP Morgan Chase and the rationale behind the OCC and FDIC's approval of the deal.
• In December 2022, Senators Warren and Tina Smith (D-Minn.) sent letters to three key banking regulators: the Federal Reserve, FDIC, and the OCC, raising concerns about the ties between the banking industry and crypto firms following FTX's bankruptcy. The senators asked each regulator how they assessed the banking system's exposure to crypto risks.
• In December 2022, Senator Warren and Representative Ilhan Omar (D-Minn.) sent a letter to the heads of all U.S. banking regulators, including Acting Comptroller Hsu, calling on them to improve banking access for immigrant communities and communities of color.
• In August 2022, Senators Warren, Dick Durbin (D-Ill.), Whitehouse, and Bernie Sanders (I-Vt.) sent a letter to the OCC, calling on it to rescind the previously issued cryptocurrency guidance and replace it with more comprehensive guidance, in coordination with other prudential regulators.

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