Capital One 2013 Annual Report Download - page 24

SUPERVISION AND REGULATION
General
Capital One Financial Corporation is a bank holding company (“BHC”) under Section 3 of the Bank Holding
Company Act of 1956, as amended (12 U.S.C. § 1842) (the “BHC Act”) and is subject to the requirements of the
BHC Act, including its capital adequacy standards and limitations on our nonbanking activities. We are also
subject to supervision, examination and regulation by the Board of Governors of the Federal Reserve System (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 the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the “Dodd-Frank Act”), Federal Reserve regulation, and Federal Reserve policy, we
are expected to act as a source of financial and managerial strength to any banks that we control, including the
Banks, and to commit resources to support them.
On May 27, 2005, we 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 nonbank 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 and dealing 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.
Our election to become a financial holding company under the GLBA certifies that the depository institutions we
control meet certain criteria, including capital, management and Community Reinvestment Act (“CRA”)
requirements. Effective July 21, 2011, under amendments to the BHC Act enacted under the Dodd-Frank Act,
Capital One Financial Corporation also must be “well capitalized” and “well managed.” The failure to meet the
criteria for financial holding company status could, depending on which requirements were not met, result in the
company facing restrictions on new financial activities or acquisitions or being required to discontinue existing
activities that are not generally permissible for bank holding companies.
The Banks are national associations chartered under the laws of the United States, the deposits of which are
insured by the Deposit Insurance Fund (the “DIF”) 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), the Banks are subject to comprehensive regulation and periodic examination by the
OCC, the FDIC and by the Consumer Financial Protection Bureau (the “CFPB”).
We are also registered as a financial institution holding company under Virginia law and, as such, we are subject
to periodic examination by Virginia’s Bureau of Financial Institutions. We also face regulation in the
international jurisdictions in which we conduct business (see below under “Regulation of International Business
by Non-U.S. Authorities”).
Regulation of Business Activities
The business activities of the Company and Banks also are subject to regulation and supervision under various
laws and regulations.
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