Community groups worried about the effects of lending to subprime borrowers who are more likely to run into serious credit card debt are asking the federal government to look into a deal between two major credit card lenders.
A number of major community groups, led by the National Community Reinvestment Coalition, are asking the U.S. Office of the Comptroller of the Currency told delay approving Capital One Financial's proposed purchase of London-based HSBC's U.S. credit card business until public hearings can be held, according to a report from Dow Jones Newswires. They say that Capital One's efforts to extend credit to subprime borrowers unfairly targets those in low-income communities to take on debt they can't afford.
The NCRC also spearheaded a successful effort to get the Federal Reserve Board to hold public hearings over Capital One's acquisition of ING's U.S. online banking business earlier this year, the report said. As a result, Capital One agreed to invest $180 billion into low-income communities over the next decade.
Capital One, like all major U.S. lenders, is once again attempting to expand lending efforts as it has seen instances of delinquency and default drop considerably over the last year.