Capital One (NYSE:COF)
Historical Stock Chart
2 Years : From Nov 2012 to Nov 2014
By Andrew R. Johnson
Business clients are holding back on investments amid uncertainty over the so-called fiscal cliff, Capital One Financial Corp. (COF) Chairman and Chief Executive Richard Fairbank said Wednesday.
"You can feel out there ... small businesses and medium-sized businesses and even larger businesses pulling back as they approach the fiscal cliff," Mr. Fairbank said during a Goldman Sachs Group Inc. (GS) conference In New York. "It's very clear in our customers on the commercial and small-business side that they are approaching the fiscal cliff with concerns."
Mr. Fairbank joins a long roster of banking executives who have warned in recent days that businesses are sitting idle because they fear another economic downturn if political leaders are unable to reach a compromise on taxes and spending. The fiscal cliff refers to government tax increases and spending cuts set to take effect after the end of the year if Congress doesn't act. The worry is the combination of tax increases and spending cuts could send the U.S. economy back into recession and drive up unemployment, potentially resulting in a new wave of loan losses for lenders.
Capital One is one of the largest U.S. credit-card lenders but has expanded into other areas of lending over the last several years. Its embarked on a series of acquisitions during a period of tepid lending demand, completing purchases of ING Direct USA from ING Groep NV (ING) and HSBC Holdings PLC's (HBC) U.S. credit-card business earlier this year.
Even if political leaders reach a resolution over how to avoid going over the fiscal cliff, Mr. Fairbank said he is skeptical it would suddenly cause businesses to become more optimistic about the economy.
Consumer-loan demand in the credit-card industry also remains low, he said.
"The card industry is working hard to pretty much hold its own in terms of" outstanding loan balances, Mr. Fairbank said.
Capital One's shares were up 0.5% at $57.28 in recent trading and are up more than 35% this year.
Write to Andrew R. Johnson at email@example.com
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