How a Capital One-Discover merger would help underserved communities

By Ismael Diaz

Ismael Diaz is vice president of the Tweedy Mile Merchant Association.

Tweedy Mile is the heart of South Gate, California. It is home to countless small businesses that power our economic growth, create jobs, and drive innovation. As Vice President of the Tweedy Mile Merchant Association, I’ve witnessed both the struggles and success of the small business owners that call Tweedy Mile home and I am committed to making sure that they have the resources they need to not only survive, but thrive.

That is why I am ecstatic about Capital One’s $265 billion Community Benefits Plan (CBP), which will be put in place should regulators approve the Capital One-Discover merger. This plan is a targeted investment into our communities and would breathe new life into our businesses and will be a game changer for our community and so many more around the country.

Because South Gate is a majority-minority community with 95.3% of residents being Latino and home to countless minority-owned businesses, I am happy to see that the CBP earmarks $5 billion in spending with diverse suppliers. Minority-owned businesses often have a harder time competing in the marketplace, and this initiative will bolster their standing to do so.

But that’s not all. The plan also promises $15 billion for small business lending in LMI areas. This funding can be transformative for the Black and Brown business owners who work hard every day to keep their doors open. Empowering these businesses to succeed is critical for job creation in these communities.

The CBP also includes $200 billion in lending for low- and moderate-income (LMI) individuals and communities. This investment is exactly the kind of funding people in our communities need to launch new businesses and build their American dream.

The Community Benefits Plan’s emphasis on financial inclusion is also a game-changer for neighborhoods like ours. Many families in South Gate have long struggled with limited access to basic banking services, which has hindered their financial growth. Capital One’s commitment to increase their Bank On certified accounts by 50% is a significant step towards providing our community with the financial tools they need. This initiative, coupled with expanded financial education programs, promises to bring more of our residents into the banking system.

What’s particularly encouraging is Capital One’s track record in helping individuals build credit, a critical issue in minority communities like ours. Their recent data shows remarkable progress: as of March 2024, an impressive 69% of their customers who initially had subprime credit scores have achieved prime credit scores of 660 or higher. This could mean more South Gate residents gaining the ability to secure loans for starting small businesses, buying homes, or making other life-changing investments. It’s this kind of targeted, impactful approach that can create lasting positive change in communities that have historically been underserved by the financial system.

It’s clear that the CBP and the Capital One-Discover merger will unleash immense benefits for historically underserved communities around the country. As regulators review this merger, I urge them to consider the benefits that the CBP will have on our communities.