Capital One’s proposed acquisition of Discover Financial for $35.3 billion has sparked a debate among industry experts and regulators. However, JPMorgan Chase CEO Jamie Dimon is not concerned about the added competition and believes in advocating for healthy competition in the credit card industry.
In an interview with CNBC’s Leslie Picker at a Miami conference, Dimon expressed his view on the potential merger, stating, “My view is, let them compete. Let them try, and if we think it’s unfair, we’ll complain about that.” Despite acknowledging that the approval of the deal would make Capital One the nation’s biggest credit card lender, Dimon praised Capital One CEO Richard Fairbank for his ability to shake up the industry.
Dimon even credited Fairbank for his own success, stating, “Richard is why I’m here.” He also expressed his admiration for Capital One’s expertise in the credit card business, saying, “They’re very good at it. I have enormous respect for Richard Fairbank and Capital One.”
While Dimon seems unconcerned about the potential impact of the merger on JPMorgan Chase, he did raise some concerns about debit payments. Due to legislation known as the Durbin Amendment, large banks like JPMorgan Chase have capped debit fees, while Discover and American Express do not face such limitations. Dimon expressed his dissatisfaction with this situation, stating, “Of course, I have a problem with that. You know, like why should they be allowed to price debit different than we price debit just because of a law that was passed?”
Aside from discussing the Capital One-Discover deal, Dimon also expressed his support for small bank mergers and industry consolidation. He believes that allowing small banks to merge would be beneficial after last year’s regional banking crisis. However, regulatory hurdles have slowed down the consolidation process.
The approval of the Capital One-Discover deal still remains uncertain as several Democrat lawmakers, including Sen. Elizabeth Warren, have urged the Federal Reserve and the Office of the Comptroller of the Currency to block the agreement. In a letter signed by more than a dozen lawmakers, they emphasized the need to protect consumers and financial stability.
Overall, Dimon’s perspective on the Capital One-Discover acquisition highlights his belief in healthy competition and his admiration for Capital One’s success in the credit card industry. While he acknowledges potential challenges, such as unfair advantages in debit payments, he remains optimistic about the future of the industry and supports small bank mergers. As the fate of the deal lies in the hands of regulators, it will be interesting to see how this proposed merger unfolds and its impact on the trillion-dollar credit card industry.
