WASHINGTON — Federal Reserve officials will meet Wednesday to discuss Capital One Financial Corp.'s $9 billion deal for ING Direct USA, the central bank said.
A final vote on the controversial deal announced in June could occur at the Fed board's meeting, which will be closed to the public. Fed officials in December approved PNC Financial Services Group Inc.'s $3.5 billion agreement to buy Royal Bank of Canada's U.S. banking operation.
The Fed held three public hearings in Washington, Chicago and San Francisco to hear from all sides whether to allow Capital One, best known for its credit card operations, to buy the U.S. online banking unit of ING Group.
Community activists and community bankers have opposed the deal, but most observers predict the Fed will approve it.
The European Commission is requiring that the U.S. division to be divested from the company as part of a series of restructuring measures. Capital One has argued that relatively few firms were willing to purchase ING Direct considering how many banks are overloaded with deposits.
The critics have argued that such a merger would create yet another "too big to fail" institution and would put the financial system at grave risk.
The Independent Community Bankers of America strongly urged the Fed to block the deal. The trade group last year called for a moratorium on all acquisitions of institutions with assets more than $100 billion until regulators finalize the apparatus prescribed by the Dodd-Frank Act for systemically important financial institutions.
Fed officials have countered by saying that Congress didn't prohibit acquisitions of bank holding companies with $50 billion or more in total assets based only on systemic risk.
Capital One has repeatedly defended the deal, arguing that it would reduce systemic risk. It has also emphasized that the deal would create thousands of jobs by the end of 2013 — including 500 in Wilmington, Del.
There are three pending state attorney general investigations of Capital One's credit card lending practices; active complaints at the Department of Housing and Urban Development that allege unfair lending practices; and concerns raised by critics that Capital One favors higher-cost credit lending over loans to low- and moderate-income borrowers.