U.S. Senator Elizabeth Warren and Congresswoman Maxine Waters have taken action against the Federal Reserve's recent approval of a merger between Capital One and Discover. The lawmakers, citing their right to request a review under the Fed's Rules of Procedure, are asking for reconsideration of this decision, which they claim poses significant risks to consumers, merchants, and the U.S. financial system.
Senator Warren and Congresswoman Waters expressed concern over the merger's potential effect on market competition, stating, "Merchants would have no choice but to accept the terms dictated by Capital One’s network, since they need to access the customers of the largest credit card issuer in the country." They stressed the market power this merger would confer, referencing Capital One CEO Richard Fairbank's description of acquiring Discover's network as a "holy grail."
The lawmakers further highlighted several economic factors they believe the Federal Reserve overlooked. These include the economic repercussions of tariffs implemented under former President Trump, the integration of DOGE with the Federal Deposit Insurance Corporation, stress data on credit cards, and an alleged Trump-Musk effort to undermine the Consumer Financial Protection Bureau (CFPB). They stated, "the Board is creating the largest credit card issuer in the country at the very moment the Trump administration is attempting to shut down the only agency with legal authority to regulate, supervise, and enforce federal consumer financial laws against the combined entity."
In their letter, Warren and Waters argue that the Federal Reserve Board's decision does not comply with the Bank Holding Company Act and the Administrative Procedure Act, calling for an "immediate stay and reconsideration of the Order."