Published August 22, 2011 10:00
August 22, 2011— Fifty California community-based organizations, members of the California Reinvestment Coalition (CRC), and policymakers have asked the Federal Reserve to hold public hearings in California on the proposed merger between Capital One and ING Direct. Despite benefiting greatly from the business of their California customers, the two banks have made no significant investments or commitments to California's communities. CRC estimates that the banks have made 10% of their combined $1.7 billion profits from California customers.
In June, Capital One announced its intention to purchase ING Direct for $9 billion. If the merger is approved by the Federal Reserve, Capital One will be the fifth largest bank in the country, creating another bank that would be “too big to fail”. The merger poses a risk to taxpayers who have become weary of bank bailouts and who are unclear what benefit a larger Capital One would bring to financial services for consumers.
This is particularly unclear in California—where both banks are profiting from their California customers but are not reinvesting in the needs of these communities. More than ten percent of Capital One’s credit card lending and an estimated equivalent amount of ING’s deposits come from California but the banks invested nothing of their $1.7 billion profit back into California communities. Capital One has no branches in California, while ING has two cafes in San Francisco and Los Angeles; the absence of branches in California absolves the bank of Community Reinvestment Act responsibilities in the state. To make matters worse, CRC’s analysis of Capital One’s home mortgage and small business lending shows that it largely ignores lower income neighborhoods in California. Capital One is reviled by consumers for its "bait and switch" tactics on its credit card interest rates.
Today, as the public comment period closes on this proposed merger, the California Reinvestment Coalition and its members have submitted over 50 letters to the Federal Reserve asking for public hearings in California. Joining them are various elected leaders including Congresswoman Barbara Lee, Congressman Bob Filner, and others.
"This merger proposes a risk to taxpayers who have been on the hook for bank bailouts,” said Alan Fisher, Executive Director of the California Reinvestment Coalition. “The Federal Reserve should hold hearings on the proposed merger to demonstrate the risks and impacts of this merger and require them to make commitments to the communities that they stand to profit from.”
For more information, please contact Kristina Bedrossian at (415) 864-3980.
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The California Reinvestment Coalition advocates for the right of low-income communities and communities of color to have fair and equal access to banking and other financial services. CRC has a membership of almost 300 nonprofit organizations and public agencies across the State.