The politics of the new Trump era just got a lot more complicated for Capital One (COF).
The huge bank and credit card lender now finds itself in the position of having to defend itself against a new lawsuit from a company owned by President Donald Trump while also seeking a big merger approval from Trump’s antitrust enforcers.
The new legal headache arrived Friday when the Trump Organization sued Capital One for allegedly debanking hundreds of its accounts following the Jan. 6, 2021 attack on the U.S. Capitol in Washington, D.C.
The "unilateral decision came about as a result of political and social motivations and Capital One’s unsubstantiated, ‘woke’ beliefs that it needed to distance itself from President Trump and his conservative political views," according to the lawsuit.
Capital One responded to the lawsuit by telling media outlets the bank "has not and does not close customer accounts for political reasons."
The unfortunate timing for the bank is that this lawsuit arrives just as the company seeks final US regulatory approvals for a merger with Discover Financial Services (DFS) that would would create the biggest credit card lender in the US and a formidable new rival to American Express (AXP), Visa (V), and Mastercard (MA).
Capital One headquarters in McLean, Va. (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images) ·BRENDAN SMIALOWSKI via Getty Images
Capital One was initially hoping for a closing of the merger in late 2024 or early 2025, but it has been extended to May 19, 2025, to allow more time for regulatory approvals.
For example, Trump's Justice Department has already filed a lawsuit seeking to block Hewlett Packard Enterprise (HPE) from acquiring rival Juniper Networks (JNPR). And Trump's new Federal Trade Commission Chair Andrew Ferguson has also kept in place stricter Biden-era standards for policing US mergers.
Capital One has scored one victory thus far from the new administration. The Consumer Financial Protection Bureau dropped a lawsuit it filed less than a week before Trump’s inauguration. It had claimed in the suit that the bank had cheated customers out of $2 billion by advertising a high-yield savings account that, in fact, paid very little interest.
'We will not stand by while big banks misuse their power'
Capital One may not be the only big bank to face new legal and political challenges during the Trump era.
In a post on the X social media platform Friday, the president's son Eric Trump warned of more pressure to come.
"This lawsuit, and those that follow, are necessary steps to protect the integrity of American business practices," he wrote. "We will not stand by while big banks misuse their power to stifle businesses and harm innocent Americans."
Conservatives have been aggressively seeking remedies to their claims that customers have been denied accounts or services due to their personal beliefs or because they hail from a certain industry deemed risky by regulators, such as cryptocurrencies.
Trump himself publicly confronted Bank of America (BAC) CEO Brian Moynihan on this topic at the World Economic Forum in January.
"I hope you start opening your bank to conservatives, because many conservatives complain that the banks are not allowing them to do business within the bank, and that included a place called Bank of America," he said to Moynihan as the two participated in a question-and-answer session following a Trump speech.
Brian Moynihan, CEO of Bank of America, at the World Economic Forum in Davos, Switzerland. REUTERS/Yves Herman ·REUTERS / Reuters
The president also appeared to include JPMorgan Chase (JPM) CEO Jamie Dimon in his confrontation.
"I don't know if the regulators mandated that because of Biden or what, but you and Jamie and everybody else, I hope you open your banks to conservatives because what you're doing is wrong," Trump added.
JPMorgan and Bank of America are the nation’s two largest banks. Both companies denied the claims they cut off their services to customers over personal beliefs and claim that any debanking happened due to onerous regulations imposed by regulators.
The GOP does appear sympathetic to that view, and several lawmakers said as much during hearings before Senate and House committees. Massachusetts Democrat Senator Elizabeth Warren also signaled her support for the topic, saying she agreed with Trump.
Senate Banking Committee Chair Tim Scott Tim Scott (R-S.C.) unveiled legislation last week designed to address debanking by removing references to "reputational risk" as a measure for determining the safety and soundness of banks.
Trump himself touched on the debanking issue at a White House crypto summit last Friday, saying that under the Biden administration "regulators strong armed banks."
Secretary of Commerce Howard Lutnick, from left, Treasury Secretary Scott Bessent, President Donald Trump, White House AI and crypto czar David Sacks and Bo Hines, a member of the presidential council of advisers for digital assets, attend the White House crypto summit last Friday. (Pool via AP) ·ASSOCIATED PRESS
"They weaponized government against the entire industry," the president told some of the crypto industry's top executives.
"But I know that feeling also," Trump added.
Banks are still optimistic that the path forward to fix that issue could ultimately turn out to be a positive for them if regulators relax some of their requirements that force banks to shed certain customers or else pay millions in fines.
But the Capital One lawsuit highlights the political complexities they may still face as conservatives keep their focus on the issue.
The Trump Organization said in its suit Friday that it had millions with Capital One when the bank informed it in March 2021 that the accounts would be shut in three months.
That resulted in "considerable financial harm and losses," the Trump Organization said in its suit.
