Savers upset about the sale of ING Direct to Capital One may have reason to hope. The Federal Reserve Board was supposed to hold a vote on whether to approve the sale today, but the vote was delayed, suggesting there might be some dissent among the Fed governors on how to proceed.
For its part, Capital One had expected a smooth regulatory approval of the ING acquisition, writing in a press release on its Q4 financial results, "The company expects to close the acquisition of ING Direct in the first quarter and the acquisition of the HSBC US Card business in the second quarter, and expects that the acquisitions will have significant impact on reported results, especially in 2012, from the purchase accounting effects, integration expenses and partial year impacts of these acquisitions."
But it may not be as open-and-shut as all that. As I noted back in September, the Fed asked Capital One's brass some pretty pointed questions about the merger that suggested the Fed was worried about creating the next Washington Mutual or Countrywide.
I think it's good for the Fed to take its time here. The regular rubber-stamping of bank mergers in the 1990s and 2000s by regulators is part of why we ended up having to bail out Too Big to Fail giants like Citibank and Bank of America. If we've agreed that TBTF is a bad thing, then it might be a good idea to be careful about potentially creating new TBTF banks, and to take some time setting precedents about how that will be done and where the regulatory lines will be drawn. For what it's worth, I think the Fed will end up approving the deal, but that approval might come with some conditions that Capital One spin off some assets.
From the perspective of ING Direct customers, this delay offers a glimmer of hope, though. I can understand why they're not happy with the deal. Not only do bank mergers usually not turn out well for customers, but ING Direct has a reputation for topnotch customer service that CapitalOne can't quite match. In fact, the credit-card arm of Capital One made Consumerist's "Worst Company in America Sweet 16" for 2011 thanks to reader complaints against the company.
And then there's the difference in yields. Right now, a savings account at ING Direct is yielding .80 percent, while an equivalent account at Capital One's online bank is yielding .50 percent .65 percent. It's hard to believe Capital One will tolerate that disparity once ING Direct is in the fold.
The Fed's delay here may mean the Fed governors are having some trouble coming to the decision to approve the deal that most analysts expect.
What do you think? Will the Fed approve ING Direct's merger with CapitalOne? What will that mean for customers?
Update: A Capital One representative contacted me to let me know I'd gotten their yield wrong. It's .65 percent, not .5 percent. There's still a disparity between ING Direct's yield and Capital One's , though, of 15 basis points, so I stand by my point.
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