WASHINGTON, Sept. 20, 2011 /PRNewswire/ -- The National Community Reinvestment Coalition testified today before the Federal Reserve, telling regulators they have a duty to block the Capital One Financial Corporation (Stock ticker: "COF") acquisition of ING Direct on the grounds that adverse effects from the acquisition, including the increase in systemic risk, will outweigh any benefits.
"If you approve this acquisition, the next too-big-to-fail bank will be the most-likely-to-fail bank because it is the least diversified and most at-risk in economic downturns," said John Taylor, president & CEO of NCRC, in testimony today.
"You have a duty to deny Capital One's application to buy ING Direct," said Taylor, arguing the bank had not demonstrated clearly significant public benefits that outweigh the increase in system risk. Taylor also compared the credit card lender to Countrywide, saying its monoline credit card business was creating risk that is spread to pensions, investors and throughout the financial system by way of securitization.
"Financial analysts, federal regulators, and Members of Congress have all identified credit card securities as the likely trigger for America's next financial crisis. To quote one financial analyst, 'mortgages were simply the first storm to make landfall; credit cards are next," said Taylor in the testimony.
"In sum, this is an unsafe, monoline business that relies on a highly sensitive single-source of income and then spreads 3/4ths of its risk to the public through selling its securities to America's retirement funds and insurance companies."
Since the announcement of the deal in July 2011, the National Community Reinvestment Coalition (NCRC) has expressed serious concern regarding the acquisition of ING Direct by Capital One Financial Corporation. The hearings are being held by the Federal Reserve in response to requests from NCRC and Massachusetts Rep. Barney Frank to Federal Reserve Board Chairman Ben Bernanke.
Today's hearing was the first of three that the Federal Reserve will hold, with additional hearings on September 27th in Chicago, and on October 5th in San Francisco. NCRC and its members will testify at both hearings.
About the National Community Reinvestment Coalition:
The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development, and vibrant communities for America's working families. www.ncrc.org
Contact: Jesse Van Tol (202) 464-2709
SOURCE National Community Reinvestment Coalition