A merger of Discover Bank, Greenwood, Del., into Capital One, National Association, McLean, Va., was approved by two federal banking regulators Friday on condition that Discover Bank and its affiliates satisfy requirements of a consent order that cites “deficiencies” in interchange fee practices that included overcharging holders of so-called “commercial” credit cards for years.
The Federal Reserve Board, in a consent order Friday, imposed a $100 million civil money penalty on Discover Bank’s holding company and affiliated services network. The Federal Deposit Insurance Corp. (FDIC) also issued a restated consent order setting a $150 million fine for Discover Bank. The FDIC order sets a restitution requirement of at least $1.225 billion.
The Fed, noting practices from 2007 to at least 2023, said in its order that the Discover “Firm” (holding company, services network and bank) had classified about 5 million consumer credit cards as “commercial” at the end of 2022, with 98% of the consumer cards misclassified as “commercial.” Commercial cards are subject to higher interchange fees, and the Fed said the firm’s merchant customers suffered approximately $1 billion in monetary harm.
The merger request was submitted in March 2024. The Federal Reserve Board and Office of the Comptroller of the Currency (OCC) announced their approval Friday, with the Fed’s written decision stating this will boost Capital One’s assets from approximately $490 billion (which makes it the 11th-largest insured depository institution in the U.S.) to more than $637 billion, equal to 2.2% of total assets of insured institutions in the U.S.
FDIC Announces Three Orders Against Discover Bank, Greenwood, Delaware
OCC Announces Conditional Approval of Capital One, National Association to Acquire Discover Bank
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