Community groups in California are protesting Capital One Financial Corp.'s planned acquisition of ING Direct, saying the banks have done little to help low-income communities in a state that has accounted for a large chunk of their profits.
In a news release Monday, members of the California Reinvestment Coalition demanded that the Federal Reserve hold hearings on the planned merger in California so that consumer groups can air their grievances. Specifically, they pointed out that more than 10 percent of Capital One's credit-card lending and roughly the same amount of ING's deposits are in California, but the banks have been absolved of Community Reinvestment Act responsibilities in the state because they do not have branches there.
"To make matters worse, the CRC's analysis of Capital One's home mortgage and small-business lending shows that it largely ignores lower-income neighborhoods in California," the release said.
Capital One announced in June that it would buy the U.S. operations of Dutch banking giant ING Group NV for roughly $9 billion. The deal would boost Capital One's deposits by more than 60%, to $200 billion.
On Monday, the California Reinvestment Coalition also echoed a prominent lawmaker's concerns that the merger would pose a risk to the banking system. Last week, Rep. Barney Frank of Massachusetts, the top Democrat on the House Financial Services Committee, sent a letter to Fed Chairman Ben Bernanke, seeking an extension of the public comment period and
"This proposed purchase would create the fifth-largest bank in the United States. For this reason alone, care should be taken to thoroughly examine the impact of this purchase with respect to the consolidation of banking assets," Frank wrote.
