Capital One Gets Through Hard Part

In his recent report affirming a "sell" rating on Wells Fargo(WFC), Rochdale Securities analyst Richard Bove said "the imposition of FAS 166 and 167 could result in a significant capital raise at the company."

A friendlier lending environment

Payroll processor ADP said in a report yesterday that job cuts by U.S. companies in October were at their lowest level in a year. That could signal that unemployment is about to crest after doubling in two years.

Capital One has done a smart job moving through the credit crisis by reducing its balance sheet and improving its net interest margin. The company's credit-card underwriting has been more conservative than its competitors, as shown by its lower loss and delinquency ratios. As far as regulatory pronouncements on handling FAS 166/167, an interpretation that's friendly to banks seems likely, as regulators won't want to disrupt the industry by forcing capital increases.

-- Reported by Philip van Doorn in Jupiter, Fla.

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