JUST IN: Two American Credit Giants To Merge, A Sign Of Economic Trouble?

Capital One is set to acquire credit giant Discover Co. in a newly announced merger.

If the $35 billion acquisition is allowed to go through, it will create a credit giant that could give Visa and Mastercard a run for their money.

Beyond that, the merger signals more consolidation is happening in the legacy financial sector, which could indicate trouble in the broader economy.

It is never a good sign when all these smaller financial entities coalesce into a few, large mega-corporations. We are already seeing this in the ongoing banking collapse. Yahoo Finance put the merger into perspective:

“Capital One’s $35B purchase of Discover would create one of the largest US credit card companies and a formidable rival to American Express, Visa, and Mastercard. Capital One would also leapfrog several other rivals and become the sixth-largest bank by assets in the US.”

Capital One’s $35B purchase of Discover would create one of the largest US credit card companies and a formidable rival to American Express, Visa, and Mastercard.

Capital One would also leapfrog several other rivals and become the sixth-largest bank by assets in the US. pic.twitter.com/wceSCVjm6l

— Yahoo Finance (@YahooFinance) February 20, 2024

$34.2 trillion in debt and Capital One is merging w/ Discover to combat a surge in loan nonperformance (defaults & delinquencies), but instead of giving taxpayers a break so they can pay down their record credit card balances, let's send more money we don't have overseas… pic.twitter.com/scxaIyZqXy

— E.J. Antoni, Ph.D. (@RealEJAntoni) February 19, 2024

With Charge Offs Soaring, Capital One To Buy Discover, Creating Credit Card Giant https://t.co/IxD4ES9h0C

— zerohedge (@zerohedge) February 19, 2024

CNBC explained the reasoning behind the merger:

“This deal gives the company a stronger hand to battle other banks, fintechs and big tech companies,” said Sanjay Sakhrani, the veteran KBW retail finance analyst.

“The more that they can separate themselves from the pack, the more they can future-proof themselves.”

Tech entrepreneur Robert J. Salvador writes: “Capital One buying Discover today is huge M&A news.But it’s also scary. We continue to see consolidation into mega companies with only a few major players in banking and finance.

Many regional banks are on the brink & we’ve seen some go under. Every step away from smaller markets and businesses moves us closer to a CBDC.

With a CBDC, your bank account is tied directly to the Federal Reserve, a single point of control can stop your spending. Buy too much gas? They deactivate your account from gas stations.

Want to buy a gun? They can block it. Next lockdown? They don’t ask you to stay home, they turn off your purchasing power. Criticize the government on social media? They can ban you from the airport. This already happens in China.

A CBDC can also make the Spending programmable, giving the government the power to introduce negative interest rates or introduce required spending (ie. you must spend X amount of your savings in a certain time or Y tax is taken directly from you).

Oh and goodbye privacy. With your purchases linked to a single central database they see every single thing you ever buy. They ban and/or phase out cash.

Congress and leading presidential candidates should work to ban these at the federal level and states should put up defenses as well like Gov. Ron DeSantis has done in Florida.

Let’s support those in Congress leading the dialogue and plan against the authoritarian Central Bank Digital Currency (CBDC) like Warren Davidson, Rep. Thomas Massie, and Sen. Lummis.

(BTW, don’t confuse this digital currency with Bitcoin. Bitcoin is literally the exact opposite of a CBDC.)”

Capital One buying Discover today is huge M&A news.

But it's also scary. We continue to see consolidation into mega companies with only a few major players in banking and finance.
Many regional banks are on the brink & we've seen some go under.

Every step away from smaller…

— Robert J Salvador (@RobertJSalvador) February 20, 2024

Fox Business noted the potential impact of the merger on consumers:

“By boosting this card network’s resources, the merger could actually create more robust competition against Discover’s bigger rivals, leading to an increase in benefits for consumers,” Berlau argued.

The other side says the deal would consolidate the industry further, providing Capital One with more leverage to lift fees.