Use Capital One -documents, annual reports, and financial statements for analysis
Case Study
Capital One is the bank identified that was too big to fail during the 2007-2009 financial crisis. They participated in the Emergency Economic Stabilization Act of 2008 (EESA) also referred to as TARP aimed at bolstering the economy and restoring confidence in the banking system.
During the crisis credit card loans were a primary sources of problems for the nation's biggest banks. About 41% of Capital One's loan portfolio consists credit card loans.
This is a large proportion when you consider that most banks allocate less than 10% of their loan portfolios to credit cards. Surprisingly during the financial crisis, Capital One lost only $46 million on an annual basis, and that was less than Bank of America.
Parts:
Introduction: Provide an overview of the research design of the paper. Introduce the various topics that will be addressed in the research paper.
Identify the method(s) that will be used to collect the data for the topics and how that data will be evaluated.
Section II: brief discussion of Capital One to include its principle services, market share, geographic locations where it operates, and major competitors.
Section III: Evaluate and discuss whether Capital One took excessive risks or had banking practices that contributed to the firm requiring funds from the TARP program. The discussion should include what factor(s) influenced your decision, the ramifications of the firm receiving TARP funds, and what actions the firm implemented to prevent future financial crisis for the firm.
Section IV: Evaluate and discuss the size and scale of the TARP program, which only has a few comparisons in U.S history. TARP has been compared to the Resolution Trust Corp. (RTC), which was used to abate the savings and loan (S&L) crisis of the late 1980s and early 1990s. Another comparison comes from the Home Owners Loan Corporation (HOLC), which was established during the Great Depression.
Discuss the pros and cons of the TARP program. Evaluate and discuss if classifying banks as "Too Big to Failure" can lead to excessive risk taking by the banks.
Section V: The Dodd-Frank Regulatory Reform Bill was passed with the intent of cleaning up the consequences of the past decade's financial sector decline. Evaluate and discuss the impact of Dodd-Frank on the firm and whether the law will help prevent future banking crisis.
Section VI: Summary and conclusion(s). The discussion should provide a brief summary of the previous sections, and the conclusions you have reached.