Capital One Finance, infamous for its predatory lending practices, is selling $3.55 Billion of its stock to the US Treasury as part of the bank bailout. While Capital One may use the money to buy other banks, its working-class debtors, however, are subject to survival of the fittest.
According to CNN Money:
"In a note to clients, Piper Jaffray analyst Robert Napoli said he believes Capital One may use the investment to acquire another depository institution."
"We view this positively for Capital One as this is cheap capital and suggests the government views Capital One as a survivor," Napoli wrote. "In the near term, we don't expect this to lead to an acceleration in lending, though it certainly positions the company very well from a capital perspective."
Capital One made $374 million in profits last quarter, below estimates.1
Senator Henry Waxman has stated concern that bank bailout money may be used for executive compensation and bonuses. A survey by eFinancialCareers reports that two-thirds of Wall Street professionals expect a bonus this year, and 36% are anticipating a larger bonus than in 2007.2
1. http://www.aol.in/news-story/capital-one-to-sell-$3-55b-in-stock-to-governmentdollar/2008102709150001548403
2. http://www.washingtonpost.com/wp-dyn/content/story/2008/10/29/ST2008102900989.html
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