August 18, 2011 / 3:11 PM / 8 years ago

UPDATE 2-US Rep. Frank wants closer look at Capital One-ING

* Senior Democrat cites concerns about Capital One

* Lawmaker asks Fed’s Bernanke for longer look, hearings

* ING forced to sell unit as part of bailout deal

* Capital One says deal lowers its risks (Adds Capital One statement, shares)

WASHINGTON, Aug 18 (Reuters) - A senior U.S. lawmaker asked the Federal Reserve on Thursday for more public scrutiny of Capital One Financial Corp’s (COF.N) proposed purchase of ING Groep NV’s ING.AS online bank ING Direct.

Representative Barney Frank, the top Democrat on the House Financial Services Committee, sent a letter to Fed Chairman Ben Bernanke, seeking a 60-day extension of the public comment period on the deal and public hearings on it.

“This proposed purchase would create the fifth-largest bank in the United States. For this reason alone, care should be taken to thoroughly examine the impact,” Frank wrote.

Capital One agreed in June to buy ING Direct from the Dutch banking and insurance group for $9 billion in stock and cash. ING had to sell the business, one of the jewels of its retail banking franchise, as part of a deal with the European Commission following its October 2008 Dutch government bailout.

Frank cited concerns about the transaction’s impact on consolidation of banking assets, the availability of credit from the resulting bank and community programs.

“A number of national consumer, civil rights and housing advocacy groups have raised concerns about the practices of the acquiring bank, including its track record with regard to previous acquisitions,” Frank said in the letter.

“These concerns merit an extension of the comment period in order to allow a thorough investigation,” he said.

In a lengthy statement in response to Frank’s letter, Capital One said the ING deal would actually decrease its risk profile and would expand public access to banking services.

“After the acquisition, the resulting institution, with just over $300 billion in assets, remains very much in line with other regional banks in terms of size and simplicity,” Capital One said. “(The) combined organization will remain well below the trillion dollar balance sheets of the largest U.S. banks and will not engage in the types of risky investment banking activities that can generate systemic risk.”

In late-morning trade Capital One shares fell 5 percent to $42.25, a slightly sharper drop than the broader markets. U.S.-listed shares of ING (ING.N) fell 8 percent to $8.12, in line with the declines ING recorded in Amsterdam. (Additional reporting by Ben Berkowitz in New York) (Reporting by Kevin Drawbaugh in Washington, Editing by Robert MacMillan, Dave Zimmerman)

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