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Warren Asks the Fed to Reconsider Approval of Capital One-Discover Merger
"This decision will inflict serious harm on consumers and merchants, especially low-income consumers and small businesses," wrote Democratic Sen. Elizabeth Warren and Rep. Maxine Waters.
May 05, 2025
Democratic Sen. Elizabeth Warren of Massachusetts and Democratic Rep. Maxine Waters of California are urging the Federal Reserve to reconsider its approval of an impending merger between Capital One Financial Corporation and Discover Financial Services, a tie-up that critics have warned could harm consumers.
In a letter sent last week, Warren and Waters wrote that the decision to approve the merger by the Federal Reserve "was inconsistent with the legal requirements" under the Bank Holding Company Act. They also argued that it did not include a number of relevant assessments, including how the the merger would impact the "convenience and needs of the community" or the "competitive effects on the credit card market."
"This decision will inflict serious harm on consumers and merchants, especially low-income consumers and small businesses, and threaten the stability of the U.S. financial system," states the letter, which was addressed to Secretary of the Board Ann Misback and dated May 1.
Warren is the ranking member on the U.S. Senate Committee on Banking, Housing, and Urban Affairs and Waters is the ranking member on the U.S. House Committee on Financial Services.
The deal was announced in February 2024 and is valued at $35 billion. A report from the Consumer Financial Protection Bureau (CFPB) released right before the acquisition was announced found that the largest credit card firms charge much higher interest rates than smaller banks and credit unions.
The deal initially received some scrutiny around possible impacts to competition, but in April 2025 overcame a major obstacle when the U.S. Department of Justice (DOJ), now under the Trump administration, decided not to challenge the merger.
The Federal Reserve and the Office of the Comptroller of the Currency gave the deal the green light last month.
In response to the DOJ's decision not to challenge the merger, Morgan Harper, the director of policy and advocacy at the American Economic Liberties Project, wrote that "if the Trump administration green-lights the Capital One-Discover merger, it will be a betrayal of working-class Americans and small businesses." The American Economic Liberties Project is an anti-monopoly research and advocacy group.
"If the deal goes through, Capital One will become the largest credit card lender in the country, the first major issuer in decades to control its own payments network, and entrench its striking dominance in subprime credit card lending," Harper continued.
One noteworthy aspect of the merger, which is expected to be finalized mid-May, is that Capital One is set to acquire Discover's card network. This means the combined firm would be akin to a larger version of American Express, "a stand-alone integrated system that could use its millions of customers to push higher fees onto merchants," according to The American Prospect.
Capitol One currently uses Visa and Mastercard credit card networks, which operate an effective duopoly of global payment processing, but has said it would transition to the Discover card network, according the outlet CNET.
This aspect of the merger is without clear precedent and raises concerns about competition, according to Jesse Van Tol, the chief executive of the National Community Reinvestment Coalition, a group that is opposed to the deal, who spoke to The New York Times in April.
"The market power it gives them, and the opportunity it gives them to set pricing in ways that captures a lot of value for the company at the expense of the consumer, is significant," Van Tol told the Times.
In their letter, Warren and Waters alleged that the Federal Reserve failed to adequately scrutinize the competitive effect of this aspect of the deal.
"The board argued that given 'the significant, larger competitors that would remain,' and that Capital One doesn't currently own a network, there aren't any competitive concerns. The board completely missed the fact that the merger would provide Capital One with significant market power to increase interchange fees charged to merchants and reduce rewards and other benefits for consumers. It didn't grapple with the implications of vertical integration and network effects," the two wrote.
When considering the conveniences and needs of the community, Warren and Waters said in their letter that the Federal Reserve did not perform the prospective analysis required by law, and instead "focused on each bank's past performance under the Community Reinvestment Act (CRA)," even though "the convenience and needs of the community is a distinct legal factor, separate and apart from banks' past performance under the CRA."
The two also said that the Federal Reserve appears to not have taken into consideration relevant findings from the CFPB, the Federal Deposit Insurance Corporation, and the DOJ.
Bloombergreported last week that the Federal Reserve received the letter and plans to response, per a spokesperson.
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Does Trump Really Want to Cap Credit Card Rates at 10%? Bernie Sanders Aims to Find Out
"When large financial institutions charge over 25% interest on credit cards, they are not engaged in the business of making credit available," said Sen. Bernie Sanders. "They are engaged in extortion and loan sharking."
Feb 04, 2025
In an effort to hold U.S. President Donald Trump to a promise he made on the campaign trail, Sen. Bernie Sanders on Tuesday introduced legislation alongside Republican Sen. Josh Hawley that would cap credit card interest rates at 10% for five years, targeting a major cash cow for Visa, Mastercard, and other corporate giants.
"During the campaign, President Trump pledged to cap credit card interest rates at 10%," Sanders (I-Vt.) said in a statement Tuesday. "I am proud to be introducing bipartisan legislation with Senator Hawley to do just that. When large financial institutions charge over 25% interest on credit cards, they are not engaged in the business of making credit available. They are engaged in extortion and loan sharking."
"We cannot continue to allow big banks to make huge profits ripping off the American people," the Vermont senator added. "This legislation will provide working families struggling to pay their bills with desperately needed financial relief."
During his 2024 White House bid, Trump said he would support a "temporary cap" on credit card interest rates "at around 10%," declaring, "We can't let them make 25% and 30%."
One recent estimate put the average credit card interest rate in the U.S. at close to 27%, and an analysis released last year by the Consumer Financial Protection Bureau (CFPB) found that credit card interest rates have surged over the past decade—a boon for card issuers and a disaster for Americans falling deeper into debt.
"Working Americans are drowning in record credit card debt while the biggest credit card issuers get richer and richer by hiking their interest rates to the moon. It's not just wrong, it's exploitative. And it needs to end," Hawley (R-Mo.) said Tuesday. "Capping credit card interest rates at 10%, just like President Trump campaigned on, is a simple way to provide meaningful relief to working people. Let's do it."
It's not clear whether Sanders and Hawley's bill stands a chance in a Congress fully controlled by Republicans, many of whom have shown a willingness to play defense for the predatory banks and credit card firms that help fund their campaigns.
The Trump White House did not respond to media requests for comment on whether the administration would throw its support behind the Sanders-Hawley proposal, which is sure to face Wall Street opposition.
During a Senate confirmation hearing last month, Sanders asked billionaire U.S. Treasury Secretary Scott Bessent whether he supports Trump's call for a 10% cap on credit card interest rates.
Bessent replied that he would "follow what President Trump wants to do" on the issue.
During Trump's first term in the White House, Sanders and Rep. Alexandria Ocasio-Cortez (D-N.Y.) introduced legislation that would have capped credit card interest rates at 15%.
Just nine Democrats in the House and one in the Senate co-sponsored the bill, which received zero Republican support.
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Trump-Appointed Judge Halts Biden Rule Capping Credit Card Fees
"The U.S. Chamber got its way for now—ensuring families get price-gouged a little longer with credit card late fees as high as $41," one advocate said of the ruling.
May 12, 2024
A Trump-appointed judge on Friday delivered a win for big banks when he granted the U.S. Chamber of Commerce a temporary injunction halting a Biden administration rule that would cap credit card fees at $8.
The Consumer Financial Protection Bureau (CFPB) rule, which would have gone into effect May 14, could save U.S. consumers more than $10 billion each year. The decision to pause its implementation, issued by U.S. District of the Northern District of Texas Judge Mark Pittman, will cost ordinary Americans around $27 million each day it is in effect.
"In their latest in a stack of lawsuits designed to pad record corporate profits at the expense of everyone else, the U.S. Chamber got its way for now—ensuring families get price-gouged a little longer with credit card late fees as high as $41," Liz Zelnick, the director of the Economic Security and Corporate Power Program at Accountable.US, said in a statement.
"It's time the U.S. Chamber stops clogging the courts with baseless lawsuits designed to enrich corporate CEOs on the backs of working families—and it's time the judiciary stops legitimizing venue shopping from big industry."
The CFPB issued the rule on March 5 as part of the Biden administration's commitment to crack down on "junk fees." However, the Chamber of Commerce and other banking trade associations—including the American Bankers Association and the Consumer Bankers Association—quickly sued to block it. The executives of Bank of America, Capital One, Citibank, and JPMorgan Chase sit on the boards of the groups behind the suit, according toThe Washington Post.
"Banks make billions in profits charging excessive late fees," Sen. Elizabeth Warren (D-Mass.) wrote on social media Saturday in response to the ruling. "Now a single Trump-appointed judge sided with bank lobbyists to block the Biden administration's new rule capping these junk fees."
Accountable.US also criticized the fact that the suit was before Pittman at all, arguing that the U.S. Chamber of Commerce filed the suit in Texas federal court so that it would end up under the jurisdiction of the 5th Circuit Court of Appeals, which has 19 Republican-appointed justices out of a total of 26. The chamber has filed nearly two-thirds of its lawsuits since 2017 with courts covered by the 5th Circuit.
"The U.S. Chamber and the big banks they represent have corrupted our judicial system by venue shopping in courtrooms of least resistance, going out of their way to avoid having their lawsuit heard by a fair and neutral federal judge," Zelnick said. "It's time the U.S. Chamber stops clogging the courts with baseless lawsuits designed to enrich corporate CEOs on the backs of working families—and it's time the judiciary stops legitimizing venue shopping from big industry."
The 5th Circuit's treatment of the case has also come under fire, as Trump-appointed Judge Don Willett has not recused himself despite the fact that he owns tens of thousands of dollars in Citigroup shares. While Willett has argued that Citigroup is not a party to the case, it belongs to trade groups that are, and any ruling on credit card fees would significantly impact the bank. Collectively, all the judges on the 5th Circuit have invested as much as $745,000 in credit card or credit issuing companies, according to the most recent publicly available information.
Donald Sherman, Gabe Lezra, and Linnaea Honl-Stuenkel of Citizens for Ethics in Washington wrote: "Judge Willett's refusal to recuse, and the lack of transparency about the rationale, reinforces the need for more judicial ethics reform to ensure that everyday Americans and government agencies have a level playing field when they go into court against corporate interests."
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