Fed Officials to Meet on Capital One-ING Direct Deal

By Donna Borak February 06, 2012, 5:08 p.m. EST 1 Min Read

M&A

Fear of Giant Banks Charges Marathon Hearing on Cap One-ING Deal

The specter of "too big to fail," coupled with the usual fuming by community groups over Capital One's CRA record, made for a dramatic nine hours — and counting.

By Donna Borak

September 20
M&A

Why Fed Is Bound to Bless Capital One's Deal for ING Direct

Denying the application would ice large banks, spook foreign owners and deprive the central bank of a key consolidation tool.

By Barbara A. Rehm

September 19
Law and regulation

Small Banks Oppose Capital One's ING Deal

Big bank deals will worsen systemic risks and unfair competition, said the ICBA, which called for a moratorium while new regulations are in the works. Capital One argued the deal would create a safer company.

By Donna Borak

September 20
Law and regulation

Capital One: You Should Thank Us for Buying ING

At its second hearing on the deal, Capital One said its merger with ING's online bank unit was the safest option for the system.

By Donna Borak

September 27

WASHINGTON — Federal Reserve officials will meet Wednesday to discuss Capital One Financial Corp.'s $9 billion deal for ING Direct USA, the central bank said.

A final vote on the controversial deal announced in June could occur at the Fed board's meeting, which will be closed to the public. Fed officials in December approved PNC Financial Services Group Inc.'s $3.5 billion agreement to buy Royal Bank of Canada's U.S. banking operation.

The Fed held three public hearings in Washington, Chicago and San Francisco to hear from all sides whether to allow Capital One, best known for its credit card operations, to buy the U.S. online banking unit of ING Group.

Community activists and community bankers have opposed the deal, but most observers predict the Fed will approve it.

The European Commission is requiring that the U.S. division to be divested from the company as part of a series of restructuring measures. Capital One has argued that relatively few firms were willing to purchase ING Direct considering how many banks are overloaded with deposits.

The critics have argued that such a merger would create yet another "too big to fail" institution and would put the financial system at grave risk.

The Independent Community Bankers of America strongly urged the Fed to block the deal. The trade group last year called for a moratorium on all acquisitions of institutions with assets more than $100 billion until regulators finalize the apparatus prescribed by the Dodd-Frank Act for systemically important financial institutions.

Fed officials have countered by saying that Congress didn't prohibit acquisitions of bank holding companies with $50 billion or more in total assets based only on systemic risk.

Capital One has repeatedly defended the deal, arguing that it would reduce systemic risk. It has also emphasized that the deal would create thousands of jobs by the end of 2013 — including 500 in Wilmington, Del.

There are three pending state attorney general investigations of Capital One's credit card lending practices; active complaints at the Department of Housing and Urban Development that allege unfair lending practices; and concerns raised by critics that Capital One favors higher-cost credit lending over loans to low- and moderate-income borrowers.

Donna Borak

Reporter, American Banker