U.S. Representative Barney Frank, the senior Democrat on the House Financial Services Committee, asked the Federal Reserve to extend its examination of Capital One Financial Corp.'s acquisition of ING Direct USA.
"This proposed purchase would create the fifth-largest bank in the United States," Frank wrote in the letter dated yesterday to Fed Chairman Ben S. Bernanke. "For this reason alone, care should be taken to thoroughly examine the impact of this purchase with respect to the consolidation of banking assets, the provision of credit by the resulting bank and compliance with the Community Reinvestment Act."
Frank, of Massachusetts, asked the Fed to extend the public comment period on the purchase for at least 60 days and hold public hearings on how it will affect consumers and the economy.
Advocates for consumer rights and affordable housing have pushed to halt the deal. The National Community Reinvestment Coalition said Capital One's purchase of ING Direct should be stopped because it may create another bank whose collapse could imperil the financial system, the organization said in a statement earlier this month.
Capital One objects to the claim that the purchase would make the bank a threat to the financial system, according to a 13-page letter the McLean, Virginia-based lender filed with the Fed on Aug. 15.
The acquisition would create benefits for consumers, shareholders and the economy by providing increased access to banking services, according to the letter. The combined institutions, which would total "just over $300 billion in assets," would place the bank in line "with other regional banks in terms of size and simplicity."
Capital One said the Fed's comment period had "provided ample time" for people to submit their views and that groups pushing for a public hearing had "failed to identify material issues of fact in dispute or otherwise justify the need" for one, the firm said in the letter.
Tatiana Stead, a spokeswoman for Capital One, said the letter provides the firm's position on the topic. Barbara Hagenbaugh, a spokeswoman for the Fed, didn't immediately return an e-mail requesting comment.
Capital One, which derives more than half its revenue from credit cards, agreed in June to buy Amsterdam-based ING Group NV's U.S. online bank for $9 billion to gain deposits and access to 7 million customers.
Capital One said it expects to complete the deal late this year or early 2012. The bank may have to pay a termination fee of $270 million if the deal to buy ING Direct falters, the bank said in a June filing with securities regulators.