Aug. 1 (Bloomberg) -- Capital One Financial Corp.’s purchase of ING Direct USA should be stopped as it would create another bank whose collapse may imperil the financial system, according to the National Community Reinvestment Coalition.
“We already have four too-big-to-fail banks, why make a fifth?” John Taylor, chief executive officer of the Washington-based advocacy group, said today in a statement. The organization said it asked the Federal Reserve to hold hearings and extend the public comment period on the $9 billion acquisition, which would make McLean, Virginia-based Capital One the sixth-biggest U.S. bank by deposits, up from seventh.
The NCRC said it filed a complaint with the U.S. Department of Housing and Urban Development, accusing Capital One of violating fair-lending laws. The company’s practices have denied homeownership to “lower- and moderate-income borrowers,” Taylor said in a telephone interview.
“It isn’t a matter of capacity of loans, it’s a matter of willingness,” Taylor said. “They’re going to be a significant player. Do they deserve to be able to get bigger?”
Pam Girardo, a Capital One spokeswoman, said the bank is “fully committed” to fair-lending practices.
“We have a range of programs and partnerships intended to facilitate lending and homeownership opportunities for genuinely qualified buyers,” Girardo said in an e-mailed statement.
The lender, led by Chairman and CEO Richard Fairbank, 60, sold $5 billion in debt and equity last month after agreeing to buy the biggest online U.S. bank from Amsterdam-based ING Groep NV. Capital One, which said it expects to complete the deal late this year or in early 2012, would gain about $80 billion of deposits and 7 million customers.
ING’s Carolien van der Giessen declined to comment.
Capital One, which gets more than 60 percent of its revenue from credit-card lending, was among 19 banks to submit capital plans to U.S. regulators for approval in January. The firm has more than $50 billion in assets, subjecting it to additional stress testing even without owning ING Direct.
“It is a concern from a shareholder perspective,” Michael Taiano, an analyst at Sandler O’Neill & Partners LP in New York, said today in a phone interview. “Are they getting bigger at a time when it’s not viewed favorably to be bigger in the minds of the bank regulators?”
Taiano has a “hold” rating on Capital One, which fell 68 cents, or 1.4 percent, to $47.12 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 11 percent this year, making Capital One the top performer of 2011 in the 24-company KBW Bank Index.
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