SecProbe.io

July 19, 2011
 Via E-mail

Richard D. Fairbank Chairman of the Board, Chief Executive Officer  and President Capital One Financial Corporation 1680 Capital One Drive McLean, VA 22102
Re: Capital One Financial Corporation
Form 10-K for Fiscal Year Ended December 31, 2010 Filed March 1, 2011 Form 10-Q for the Quarterly Period Ended March 31, 2011 Filed May 10, 2011
  File No. 001-13300
Dear Mr. Fairbank:
 We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with  information so we may better understand your
disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advi sing us when you will provide the requested
response.  Where we have requested changes in  future filings, please include a draft of your
proposed disclosures that clearly identifies new or revised disclosu res.  If you do not believe our
comments apply to your facts and circumstances or  do not believe an amendment is appropriate,
please tell us why in your response.
 After reviewing any amendment to your filing and the information you provide in
response to these comments, including the draf t of your proposed disclosures, we may have
additional comments.    Form 10-K for the Fiscal Year Ended December 31, 2010

Item 1.  Business
Business Segments, page 2
 1. Please revise your description in Commercial Banking to better define the phrase “middle
market customers” in your periodic and annual reports.

 Richard D. Fairbank Capital One Financial Corporation July 19, 2011 Page 2

 Deposit and Deposit Insurance, page 5

 2. We note that “[a]bsent any action that management may take to minimize deposit
insurance assessments, the Bank’s assessments will increase significantly starting for the period beginning on April 1, 2011.”  Please prov ide us with draft disclosure to be
included in future filings that quan tifies the increased assessment.
 Supervision and Regulation

Heightened Prudential and Other Require ments under the Dodd-Frank Act, page 4
 3. We note your disclosure the Dodd-Frank Act im poses new, more stringent standards and
requirements with respect to certain activities, including pr oprietary trad ing (under the
“Volcker Rule”).  We also note your disclosu re on page 170 that net gains and losses on
your investment securities portfolio and “cer tain trading activities” are included in your
Other operating segment.  Although it is not clear from your disclosures whether you do
participate in proprietary trad ing activities, the disclosure on page 170 seems to allude to
the fact that you may.  We believe that separa te quantification of your  proprietary trading
revenues will provide useful information to allow readers to understand the significance
of your proprietary trading ac tivities to your overall results of operations and to more
clearly understand the impact that the Volcke r Rule and its limitations on proprietary
trading activities is expected to have on your business going forward.  Accordingly,
please revise your future filings to  separately discuss the following:

 Clarify whether you do or do not participate in proprietary trading activities.

 Clearly define what you cons ider to represent proprieta ry trading activities and
discuss changes you plan to implement, or have implemented, as a result of future
prohibitions or limitations on this type of activity in the future.

 Disclose your revenues earned from proprietary trading activities.

 Clearly identify aspects of your business that  are similar to but excluded from your
definition of “proprietary trading” for th ese purposes, and speci fically disclose how
you differentiate such activities. Tell us th e extent to which you believe it is possible
that such activities will be scoped into th e final regulatory defi nition of proprietary
trading.

 Discuss the expected effects of the Volcker rule on your business units that sponsor or
invest in private equity or he dge funds, if applicable.   Clearly identify the extent to
which such activities have b een terminated or disposed of as well as the steps you
plan to take to terminate or dispose of the rest of these components.

 Richard D. Fairbank Capital One Financial Corporation July 19, 2011 Page 3

 Item 1A. Risk Factors

 4. We note that the increase in reported net inco me in 2010 “was largely attributable to a
substantial reduction in the provision for loan and lease losses.”  Please provide us with a
draft of a risk factor to be included in future filings that clearly discloses that the reduction in the provision for loan and lease losses is a si gnificant diver of net income
and that this level of net pr ofit may not be sustainable.
 Compliance with New and Existing Laws and Re gulations May Increase our Costs…, page 12

 5. Please provide us with draft disclosure to be included in future filings that quantifies the
impact to your revenues resulting from the limit on interchange fees.

We May Experience Increased Losses Asso ciated with Mortgage Repurchases and
Indemnification Obligations, page 14
 6. Please provide us with draft disclosure and revise your future filings to add specific
quantifications to this risk factor indica ting what your reasonably possible loss was for
mortgage repurchases and indemnification obl igations as of the period.  Please also
disclose that you do not have complete information about the underlying credit
performance of mortgages sold to others that  you do not service, and quantify the original
principal balance of mortgage loans that fall into this category.

Item 7. Management’s Discussion and Analys is of Financial Condition and Results of
Operations
Table 11:  Loan Portfolio Composition, page 51
 7. We note your loan portfolio composition di sclosures on page 51.  Please expand the
narrative describing this table by providing more details regarding your lending policies
and procedures.  Please expand this disclosure to include a narrative discussion of your
underwriting policies and procedures in your primary lending products; lending
requirements such as loan-to-value ratios, credit requirements and documentation; which
loans are offered at fixed or va riable rates; and the factors that lead you to hold loans for
investment or sell them in the secondary markets.
Non-performing Assets, page 56

 8. We note your disclosure in footnote two to Table 19 on page 57 that addresses how you
treat purchased credit impaired (PCI) loans in your non-perf orming assets balances and
ratios, and your disclosure in footnote three to Table 20 on page 59 that addresses the
same issue.  We acknowledge that these disclo sures were enhanced in your current filings
due to comments issued during our prior year review in order to clarify that PCI loans
were recorded at fair value upon acquisition and, therefore, are only included in non-

 Richard D. Fairbank Capital One Financial Corporation July 19, 2011 Page 4

 performing loans and other credit quality balances and ratios if they experience
subsequent credit deteriorati on.  However, your disclosure in  footnote one to the tabular
disclosure on page 119 simply states that PC I loans are “excluded” from loans past due
90-days and still accruing and non-performing loans, as well as your disclosure on page
102 that states you “separately track and repor t PCI loans and exclude these loans from
our delinquency and nonperforming loan statistic s.”  Please revise your disclosures on
pages 119 and 102, as well as any other simila r disclosures throughout your filings as
applicable, to clarify that PCI loans are included in these credit quality amounts and
ratios if they experience credit dete rioration subsequent  to acquisition
 Loan Modifications and Restructurings, page 59

 9. We note that you have a significant credit card portfolio and that as of December 31,
2010 and March 31, 2011 you had $912 million a nd $931 million, respectively, of credit
card loans outstanding for borrowers enrolled  in a credit card m odification program, all
of which appear to be considered to be tr oubled debt restructuri ngs (TDRs).  Please tell
us whether any of your credit card loan agr eements have provisions where the interest
rate on the credit card loan is  automatically increased due to non-payment, late-payment,
or similar events.  If so, please tell us, and disclose in future filings, how you determined
the effective interest rate of the loan existi ng at the origination or acquisition of the loan
at the time of the TDR for pur poses of measuring the amount of the impairment.  For
example, tell us whether for purposes of th is calculation you assume d the interest rate
existing at origination was the original rate, prior to being increased for any events of
default/late payment, or the rate immediat ely in effect prior to the modification.
 Item 8. Financial Statements

Note 1. Summary of Significant Accounting Policies
Resale and Repurchase Agreements, page 99
 10. We note your disclosure that you “generally” account for your securities purchased under
agreements to resell and securities sold unde r agreements to repurchase transactions as
collateralized financing transac tions and not as sales.  Please tell us whether you account
for any of these transactions as sales.  If you do, please provide your accounting analysis that you relied on when concluding those transactions were sales under current
accounting guidance, and please revise your fu ture filings to define the extent of
exceptions reflected in your use of the word “generally”.  If you do not account for any
transactions as sales, please re vise this disclosure in future filings to clarify that fact.
 Charge-offs, page 103

 11. We note from your disclosure here and on pa ge 102 that your time period for classifying
unsecured small business lines of credit and other non-credit card consumer loans as nonperforming is the same time frame for char ging-off the loan (i.e. 180 days and 120

 Richard D. Fairbank Capital One Financial Corporation July 19, 2011 Page 5

 days, respectively).  Please confirm in your response as well as in your disclosure
regarding nonperforming loans that th e time frame for both classification as
nonperforming and for charging-off the loan is the same for both of these loan
categories.  Please revise future filings to  explain how your nonperforming loan ratios are
impacted by having simultaneous triggers for classifying these loan s as nonperforming
and for charge-off.
 Definitive Proxy Statement on Schedule 14A

Compensation of Directors, page 23
 12. We note that the “Option Awards” column repor ts the value of stoc k options granted in
exchange for cash compensation.  Please confirm that in future filings you will disclose
the amount of cash compensation the director  elected to forego under the column for
“Fees Earned or Paid in Cash” rather than  the column for “Option Awards.”  See our
guidance in Regulation S-K Compliance a nd Disclosure Interpretation 119.03.
 Form 10-Q for the Quarterly Period Ended March 31, 2011

 Item 2.  Management’s Discussion and Analys is of Financial Condition and Results of
Operations
Consolidated Balance Sheet Anal ysis and Credit Performance
Delinquency Rates, page 24
 13. We note your disclosure here related to loans that you consider to be delinquent,
including disclosure of 30+ day performing  delinquent loans and 30+ day delinquent
loans.  We note similar delinquent loan disclo sures on page two.  It is unclear from your
disclosures what exactly th e difference is between perf orming delinquent loans and
delinquent loans for each loan category.  Pl ease tell us and revise future filings,
throughout your filing as appropriate, to di sclose the difference between 30+ day
performing delinquent loans and 30+ day delinquent loans.
 Interim Consolidated Financial Statements

Note 16—Subsequent Events, page 114
 14. You disclose in Note 16 that under the term s of your agreement w ith Kohl’s, you expect
Kohl’s to reimburse you for a fixed percentage of credit losses incu rred.  You state that
the loss sharing amounts from Kohl’s will be reflected as a reduction in your provision
for loan and lease losses and net charge-offs.  Please address the following regarding this
disclosure:

 Tell us in detail the terms of the loss sh aring agreement provisions and explain how
you accounted for the loss sharing agreement at  inception as well as subsequently.

 Richard D. Fairbank Capital One Financial Corporation July 19, 2011 Page 6

  Provide us with a walkthrough of the journal entries.  Specifically identify where the
receivable from Kohl’s is reported and wh ether you are reporting the allowance gross
or net.

 Clarify how you are reflecting the amounts in  your presentation of each gross charge-
offs and recoveries.

 Tell us whether you accounted for the August 2010 partnership agreement as a
business combination or the acqui sition of a loan portfolio.

 Tell us whether the loss sharing agreement provides coverage on a specific loan-by-
loan basis or on a portfolio basis.

 To the extent the loss sharing agreemen t does not provide coverage on a specific
loan-by-loan basis, tell us how you determin ed it was appropriate to reflect the effects
of the loss sharing agreement as a reduction of your allowance and gross charge-offs.
Clarify how it how it is reflected  in your rollforward of th e allowance.  It would not
seem appropriate to net such recoveries in the computation of  your allowance.

 Tell us the amount by which your allowance and net charge-offs have been reduced
for each quarterly period since the portfolio acquisition in August 2010.

 For transparency purposes, revi se your future filings to clarify the above points as
appropriate.
              We urge all persons who are res ponsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.                In responding to our comments, please provide a written statement from the company
acknowledging that:
 the company is responsible for the adequacy an d accuracy of the disclo sure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as  a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of  the United States.

 Richard D. Fairbank Capital One Financial Corporation July 19, 2011 Page 7

 You may contact Brittany E bbertt at (202) 551-3572 or Kevin W. Vaughn, Accounting
Branch Chief at (202) 551-3494 if you have que stions regarding comments on the financial
statements and related matters.  Please cont act Eric Envall at (202) 551-3234 or Sebastian
Gomez Abero, Special Couns el at (202) 551-3578 with  any other questions.

Sincerely,
  /s/ Sebastian Gomez Abero for   Suzanne Hayes
Assistant Director