Capital One 2008 Annual Report Download - page 29

11
Intellectual Property
As part of our overall and ongoing strategy to protect and enhance our intellectual property, we rely on a variety of protections,
including copyrights, trademarks, trade secrets, patents and certain restrictions on disclosure and competition. We also undertake other
measures to control access to and distribution of our other proprietary information. Despite these precautions, it may be possible for a
third party to copy or otherwise obtain and use certain intellectual property or proprietary information without authorization. Our
precautions may not prevent misappropriation or infringement of our intellectual property or proprietary information. In addition, our
competitors also file patent applications for innovations that are used in our industry. The ability of our competitors to obtain such
patents may adversely affect our ability to compete. Conversely, our ability to obtain such patents may increase our competitive
advantage. There can be no assurance that we will be successful in such efforts, or that the ability of our competitors to obtain such
patents may not adversely impact our financial results.
Employees
As of December 31, 2008, we employed approximately 25,800 employees whom we refer to as associates. A central part of our
philosophy is to attract and maintain a highly capable staff. We view current associate relations to be satisfactory. None of our
associates is covered under a collective bargaining agreement.
Supervision and Regulation
General
The Company is a bank holding company (BHC) under Section 3 of the Bank Holding Company Act of 1956, as amended (the
BHC Act) (12 U.S.C. § 1842). The Company is subject to the requirements of the BHC Act, including its capital adequacy standards
and limitations on the Companys nonbanking activities, and to supervision, examination and regulation by the Federal Reserve Board
(the Federal Reserve). Permissible activities for a BHC include those activities that are so closely related to banking as to be a
proper incident thereto such as consumer lending and other activities that have been approved by the Federal Reserve by regulation or
order. Certain servicing activities are also permissible for a BHC if conducted for or on behalf of the BHC or any of its affiliates.
Impermissible activities for BHCs include activities that are related to commerce such as retail sales of nonfinancial products. Under
Federal Reserve policy, the Corporation is expected to act as a source of financial and managerial strength to any banks that it
controls, including COBNA and CONA (the Banks), and to commit resources to support them.
On May 27, 2005, the Company became a financial holding company under the Gramm-Leach-Bliley Act amendments to the BHC
Act (the GLBA). The GLBA removed many of the restrictions on the activities of BHCs that become financial holding companies.
A financial holding company, and the non-bank companies under its control, are permitted to engage in activities considered financial
in nature (including, for example, insurance underwriting, agency sales and brokerage, securities underwriting, dealing and brokerage
and merchant banking activities); incidental to financial activities; or complementary to financial activities if the Federal Reserve
determines that they pose no risk to the safety or soundness of depository institutions or the financial system in general.
The Companys election to become a financial holding company under the GLBA certifies that the depository institutions the
Company controls meet certain criteria, including capital, management and Community Reinvestment Act (CRA) requirements. If
the Company were to fail to continue to meet the criteria for financial holding company status, it could, depending on which
requirements it failed to meet, face restrictions on new financial activities or acquisitions and/or be required to discontinue existing
activities that are not generally permissible for bank holding companies.
COBNA and CONA are national associations chartered under the laws of the United States, the deposits of which are insured by the
Deposit Insurance Fund of the Federal Deposit Insurance Corporation (the FDIC) up to applicable limits. In addition to regulatory
requirements imposed as a result of COBNAs international operations (discussed below), COBNA and CONA are subject to
comprehensive regulation and periodic examination by the OCC and the FDIC.
On January 1, 2008, Capital One Auto Finance, Inc. (COAF), which engages in automobile financing activities, became a wholly
owned subsidiary of CONA. In connection with the COAF reorganization, which included the transfer of approximately $10 billion in
assets, the Corporation committed to the Federal Reserve to contribute capital to CONA equal to the amount of transferred assets that
are or become low-quality assets (as defined in Regulation W) and to hold an amount of risk based capital equal to the book value of
low-quality assets. CONA must consider these commitments, in addition to the factors outlined in Dividends and Transfers of Funds
below, among other factors when declaring a dividend to the Company.