Posted on 02/20/2024 5:59:27 AM PST by Red Badger
Capital One announced on Monday it was acquiring a rival financial services company in a massive stock deal as Americans continue to be plagued with credit card debt, according to The New York Times.
The McLean, Virginia-based bank announced it would acquire Discover Financial Services in a $35.3 billion all-stock transaction, The New York Times reported. The acquisition of Discover would give Capital One more market power due to Discover having a payments network of its own at the same time as credit card debt continues to mount for consumers, according to The Wall Street Journal.
The acquisition could face a major hurdle from federal regulators, The New York Times reported. The Comptroller of the Currency announced it wanted to slow down the process to approve mergers and acquisitions on Jan. 29.
“It is very difficult to imagine how federal regulators could allow Capital One to buy Discover given the requirement that mergers benefit the public as well as insiders,” National Community Reinvestment Coalition President and CEO Jesse Van Tol told The New York Times.
Discover shareholders will receive a 26% premium over the company’s closing stock price, getting a little less than 102 shares of Capital One stock for every 100 shares of Discover stock if regulators approve the acquisition.
The deal comes as Americans’ total household debt hit $17.5 trillion in the fourth quarter of 2023. Credit card delinquencies of 90 days or more rose to 6.36% at the end of 2023, while total credit card debt rose to $1.13 trillion, according to the Federal Reserve Bank of New York.
“Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,” New York Fed advisor Wilbert van der Klaauw said in a statement. “This signals increased financial stress, especially among younger and lower-income households.”
Capital One and Discover did not immediately respond to the Daily Caller News Foundation’s request for comment.
Anti-Trust Laws, what are those?
“It is very difficult to imagine how federal regulators could allow Capital One to buy Discover given the requirement that mergers benefit the public as well as insiders,” National Community Reinvestment Coalition President and CEO Jesse Van Tol told The New York Times.
I was glad I discovered Discover. Then I Discovered how fast I could exceed my limit. Then I Discovered I couldn’t pay my bill. Now, they’re trying to Discover my new address.
I do not see this as a positive step.
We’ve been a Discover cardholder since they began...........
Didn’t Discover peak around end of 2020...worth around $40-billion, and it’s been on a month-by-month decline ever since then?
There are thousands of banks and credit unions that issue credit cards.
“Discover shareholders will receive a 26% premium over the company’s closing stock price...”
To match their current 26% interest rate? *SNORT*
Let’s Go, Brandon!
The Debt Kings meet and merge their kingdoms. In the distance, the peasants grumble and hope for deliverance.
“The Debt Kings meet and merge their kingdoms”
My wife and talk about this all the time. We just don’t get the concept of people being up to their ears in credit card debt.
We have one card for emergency use only and the balance is rarely above $500.
Our vehicles are paid off and we are well within reach of paying off our home.
Of all the life lessons my parents taught me, one very valuable one was, if you can’t afford it...DO WITHOUT.
A lesson that has served me well my whole life.
P.T. Barnum was right all along.
Same here. It was an offshoot of Sears, if you remember. I was in college and was establishing my first, universally (???) accepted credit card. It was ridiculed and looked down upon as a joke credit card at first. I didn't care. It spent just like Visa and Mastercard.
I think the intial limit was $300 but I felt like a king walking through the store with that card in my pocket. A pair of jeans here, a few Craftsmen tools there, a compact stereo system, and I was right up to my limit.
Then the bill came and I learned the hard lesson of how making just the minimum payment would never get the dang thing paid off. Glad I learned that lesson early. I haven't carried over a credit card balance in decades now.
Discover was the outshoot of Sears store credit card. Sears for a select time had an ISP, a credit card company, a customer facing real time brokerage, a real estate company, a appliance repair fleet and 2400 stores across the nation. That all disappeared in 25 years of listening to outside consultants. Started as rightsizing out of smaller malls just 25 units a year. If sears retained ownership of the bank and the credit card they would be in business today instead of receivership.
Discover at it’s high water mark flowed cash, it was the best credit card to keep a balance on because it offered rates about 6 to 12 percent higher than prime, so during the 1990s a 16.5% rate on credit card balances was only available to discover card. 2006 the discover card customers took a massive hit, they did not get rescued in their investments the way AIG and JPMC did.
Discover was the first to also offered to transfer you balance from other cards. Sears was so successful at being a bank they were forced to spin the company off, because the real estate holdings and the stores just were not as profitable. They sold the tower in Chicago, they sold out to corprate value artists who striped the company for parts and left a shell of retail operation in the market share where Walmart then had 15 year younger IT systems to support lean retailing. THat sears stuck with some horrible long term service contracts for minor discounts in their IT plant was the thing of much gosip here in Chicago.
“Capital One to Acquire Discover as Debt Continues to Strangle Americans”
What a stupid headline!
I wonder who created the debt?
Does anyone still use Discover?
When I ran my own business, they charged the highest fees and their clients tended to be the most “difficult.”
Discover could disappear and I am pretty sure most of the world would not care.
I use it every day.................
“There are thousands of banks and credit unions that issue credit cards.”
Lot’s of issuers, but it’s Visa, Mastercard, or Amex managing all those cards.
This merger is an attempt to turn Discover into a real player again.
More wealth consolidation to the elite wealthy.
“There are thousands of banks and credit unions that issue credit cards.”
You didn’t finish that statement, so let me do it for you.
“There are thousands of banks and credit unions that issue credit cards...from one of a handful of credit card companies.”
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