Capital One, Little Credit

The regulatory angle could also hamper another reputed part of Capital One's strategy, which is to buy a bank. The company wants to do this to diversify and gain cheaper and more stable funding, but if it did so, it might come under strong pressure from the OCC and the Fed if substantial amounts of its loans are experiencing negative amortization. Even if regulators did smile on a bank purchase, Capital One needs a higher price-to-earnings multiple to make most bank acquisitions accretive to earnings.

And Capital One won't have a chance of getting its multiple higher if even a whiff of credit worries return. To be sure, Capital One's numbers show almost no sign of credit problems, and the company's earnings have been hugely boosted by skimpier bad-loan reserving. However, Portales' Ryan notes that fourth-quarter numbers showed a small increase in charge-offs leading to a surprisingly large $110 million addition to reserves, which was a big contributor to the earnings shortfall.

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