Capital One (COF), the financial services company, and Discover (DFS), the payment service firm, want to join hands in a big $35.3 billion deal. If all goes well, this will make them the biggest credit card group in the U.S. They will have more cards than JPMorgan Chase (JPM). The deal also gave Capital One a big win; it got the payment system it sought. There’s no longer need to rely on Visa (V) or Mastercard (MA) all the time. But big deals like this don’t just sail through. There are rules to follow, and some folks don’t like what they see. Let’s try to clear all the confusion and paint a clear image of how things currently stand.
The Legal Hurdles
The deal has hit a few bumps. Some say it could harm buyers by cutting down card choices. A few lawsuits claim that folks were not told the whole truth about what this deal means. And then there’s the New York Attorney General digging into how this might hurt those with weak credit. Let’s not forget the Federal Reserve and OCC (a bank watchdog group). They still need to say “yes” before this can go through.
Will these hurdles stop the deal? It’s tough to say. Big banks always get hit with rules, and most still find a way. Delays might stretch things out, with the current deadline for completing the merger set for May. The deal might just slide through if Capital One plays nice with the rule-makers.
What This Means for the Market
If the deal closes, it will shake up the game. Visa and Mastercard could feel the heat since Capital One won’t lean on them as much. Stores might even see lower fees. But buyers might have to watch out as those fancy rewards could come with bigger rates or extra fees. So, will the deal clear all the hurdles? Most likely. But as with all big moves, it will cross many intersections before arriving safely at the final destination.
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