pending Capital One $35B purchase of Discover gets regulatory approvals

The pending merger between Capital One and Discover Financial Services received approval from several regulators Friday, bringing the $35 billion tie-up closer to completion.

The Federal Reserve and the Office of the Comptroller of the Currency signed off on the deal, which was first announced in February 2024.

The Federal Reserve Board said it entered into a consent order with Discover and assessed a fine of $100 million for overcharging certain interchange fees from 2007 through 2023. Discover has since terminated these practices and is repaying those fees to affected customers, according to the Federal Reserve. The board’s action is being taken in coordination with the Federal Deposit Insurance Corp.

It said Capital One has committed that it will comply with the Board’s action against Discover of Riverwoods, Illinois, including remediation requirement, as a condition of approval.

The OCC said its approval reflects its “careful analysis of the effect of the merger on communities, the banking industry, and the U.S. financial system.”

Judge pauses plans for mass layoffs at Consumer financial protection bureau

President Donald Trump’s attempt to fire nearly everyone at the Consumer Financial Protection Bureau was paused on Friday by a federal judge, who said she was “deeply concerned” about the plan.

The decision leaves in limbo a bureau created after the Great Recession to safeguard against fraud, abuse and deceptive practices. Trump administration officials argue that it has overstepped its authority and should have a more limited mission.

On Thursday, the administration officials moved to fire roughly 1,500 people, leaving around 200 employees, through a reduction in force that would dramatically downsize the bureau.

U.S. District Judge Amy Berman Jackson said she was worried the layoffs would violate her earlier order stopping the Republican administration from shutting down the CFPB. She’s been considering a lawsuit filed by an employee union that wants to preserve the bureau. Jackson scheduled a hearing for April 28.

Fed’s Mary Daly says rates on hold but cuts still possible this year

Federal Reserve Bank of San Francisco President Mary Daly said the U.S. central bank may hold interest rates longer than anticipated due to inflation risks, but could yet cut later this year.

“The risks to inflation are more elevated than they they were a year ago, so the consequence of that is we might have to hold policy tighter for longer than we had thought,” Daly said Friday during an event at UC Berkeley. “But that doesn’t mean tight forever because, ultimately, inflation is coming down.”

Daly said she remained comfortable with the median forecast in the Fed’s March Summary of Economic Projections that pointed to two quarter-point rate cuts this year.

If inflation does eventually decline, “we do have to make gradual reductions in the interest rate, something like what we said in the SEP, in order to ensure that we don’t over-tighten the economy,” Daly said.

The San Francisco Fed chief stressed, however, there was no need to rush.

Compiled from Associated Press and Bloomberg reports.