Last week I wrote about the Fed's delayed decision on whether to approve Capital One's purchase of saver favorite ING Direct. Well, it turns out it was more foot-dragging than it was a real sign of trouble for the deal. Yesterday the Federal Reserve agreed to give its blessing to the deal.
As I noted in the blog post, some ING Direct customers aren't thrilled about the deal, and are worried that the above-market yields and customer service they love at ING Direct are in jeopardy.
Here's what one ING Direct customer posting as Debbie had to say on the matter:
For THIS customer, it will mean that my banking will shift to either USAA or Ally. I set accounts up at both of these banks in anticipation of the sale going through, and will switch my banking today if it does. That is what Cap One does not seem to understand. We who bank at ING because we really love this bank will just go elsewhere.
This week a Capital One representative reached out to me and urged me, and current ING customers, to keep an open mind about Capital One's stewardship of ING Direct's accounts going forward:
Capital One has no current plans to change ING customer accounts. Customers will still enjoy competitive rates, no fees and the same online experience they've come to know and love from ING Direct.
Regarding customer service, J.D. Power and Associates recently recognized Capital One for providing outstanding customer service across our business lines, including credit card, which you mentioned in your story. We regret that we disappointed some people in the past, but improving the customer experience has been our top priority for a number of years and acknowledgment from experts like JD Power hopefully will signal to people that we mean it.
I hope the company decides to stick by that policy for the long term. It would seem to be a win-win, saving customers the hassle of switching savings account providers, and helping Capital One maintain the value of its new property. Online savings customers are notoriously fickle in the face of falling yields, and I doubt they'll stay if rates aren't consistently in the top echelon.
But that still doesn't address the "too big to fail" issue. As I noted last week, this was the first bank deal to be subject to a new test: would it threaten the financial system if the newly created company were to fail?
It's an important question. This deal could move Capital One up to 5th place overall in the U.S. market, in terms of deposits. I guess the Fed has decided that as long as a bank doesn't reach the size of a JPMorgan Chase, which will still dwarf Capital One in terms of deposits, then it's not a big enough threat to the financial system to warrant holding up a major deal like this one.
What do you think? Will you stick with ING Direct? Are we creating another TBTF institution?
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