WASHINGTON — The Federal Reserve Board's failure to announce a final decision on Capital One Financial Corp.'s $9 billion deal to buy ING Direct USA has left many observers wondering what's going on behind the scenes.

The central bank has appeared to punt on the issue twice during the past week, first by rescheduling a planned board meeting to Monday and then by refraining from announcing a decision after it met.

The unexpected delay has raised some questions on whether the Fed may be planning to reject the deal — an outcome most observers still consider highly unlikely. Instead, observers said the Fed is treading cautiously and is likely fine-tuning what it will say when it approves the deal.

"It's a big transaction, and the Fed's got to consider all these new systemic things that Dodd-Frank requires them to consider, and I think they want to do it right," said John Douglas, a partner at Davis Polk & Wardwell and former counsel for the Federal Deposit Insurance Corp. "They want to make sure that the public order that comes out really sends the right signals to the market about how the Fed is going to think about big transactions."

The Capital One deal is viewed as the first test case for regulators in assessing systemic risk under Dodd-Frank. Although the central bank has approved much bigger deals in the past, its caution this time reflects how the financial crisis has raised the stakes for the Fed, according to observers.

"The Fed did a lot of things wrong, just like everybody else, and I think it's believing now that it will not repeat those errors and new errors, and therefore has become much more conservative in its approach," said Ernest Patrikis, a partner with White & Case LLP and former general counsel of the New York Federal Reserve. "They are searching in the new environment for the right policy, the right stance."

Still, there is little doubt that the double delay is unusual, especially when the outcome does not appear to be in much doubt. If the Fed were planning to deny the transaction, most observers said it would have done so long before this point.

Instead, they said it's more likely that the Fed is making final adjustments to its deal to accommodate requests by specific governors, or possibly going so far as to attach conditions to the merger to address fears it will create another "too big to fail" bank.

"If I were a betting person, there were one or more governors who wanted changes in the language in the order," said one banking attorney, under the condition of anonymity. "That's not unprecedented."

Typically in such transactions, alterations are requested and later re-circulated and approved by each individual member of the board, a process that can take a few days.

If, however, the process drags on much longer, observers said it would be a sign there are more serious issues in play.

At issue is whether the deal will — as community groups and small banks argue — create an institution that will pose a systemic threat to the system. CapOne's proposal marks the first proposed acquisition by a bank with more than $50 billion of assets since the passage of Dodd-Frank.

From the start, the Fed has struck a cautious tone on the merger, which was first proposed in June.

CapOne has argued the deal would not make it riskier, but instead would create more jobs and allow the smooth acquisition of ING Group's banking unit, which the parent firm is required to sell by international regulators.

But critics have said the deal would repeat the mistakes of the past, allowing an already big institution to grow larger and more interconnected.

In the hopes of showing a willingness to listen, the Fed scheduled a series of public hearings held in Washington, Chicago and San Francisco to hear from all sides.

"When the Federal Reserve considers an application, we look at a number of factors under the Bank Holding Company Act. These include: financial issues, managerial issues, competitive issues and the convenience and needs of the communities affected," said Sandra Braunstein, director of the Fed's Division of Consumer and Community Affairs at the Sept. 20 public hearing in Washington. "The purpose of the public meeting today is to receive information regarding these factors and to clarify factual issue related to the application."

But Fed officials have hinted that they do not view the deal as systemically risky — at least not on the basis of size alone.

"It is important to note that, while Congress instructed us to consider the extent to which a proposed acquisition would pose a greater risk to financial stability, it clearly did not instruct us to reject an acquisition simply because there would be any increase in such risks," Fed Gov. Daniel Tarullo said in a speech last year. "Instead, it appears we have been instructed to add any increased systemic risk to the list of adverse effects that could result from the merger and then determine whether the benefits to the public of the acquisition outweigh these adverse effects."

Despite what has appeared to be false starts and delays, observers said there does not appear to be signs the Fed has changed its mind.

"It's hard for me to see why this deal doesn't get approved," said Douglas. "It's good for Capital One; it broadens its funding base. It's good for ING Direct, because it gets access to better assets and makes for a more viable institution. It's not systemically more complicated. It's not like they are introducing a great deal more complexity into the system. All of the factors that you would think about — none of those lead you to think this should be denied for any reason."

Others overwhelmingly agreed.

"Having gone this far, I would be amazed if it fell through," said Patrikis. "I could see conditions being imposed that satisfied concerns of people."

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