In 1988, under the support of Signet Bank, Richard Fairbank and Nigel Morris began building the foundation for Capital One in 1988. Fairbank believed there were added opportunities in the credit card industry that banks were missing out on. Along with Morris, he planned to construct a more integrated and scientific approach to market bank cards. The plan would allow companies to modify pricing strategies and card options for individual customers. Fairbank and Morris intended to revolutionize Signet's $1 billion credit card business. Fairbank and Morris’ engineered the thorough study of the lifestyles and spending habits of so-called prime customers to find the better bets. Offering middle-income customers interest rates below the typical …show more content…
A monoline is a company where the vast majority of its business was in consumer lending, mainly credit cards, making it particularly risky. Capital One performed quite well despite its limited approach, but was still looking to expand beyond credit cards. With the acquisition of several retail banks, Capital One expanded into retail banking with a focus on subprime customers. One of the retail banks they acquired was Melville, New York-based North Fork Bancorporation for $14.6 billion. It was only the second bank bought by Capital One at the time and was the larger of two acquisitions comprising Capital One's 2005-06 expansion into retail banking. Through the acquisition of parent company North Fork Bancorporation, Capital One also snatched up a significant piece in GreenPoint …show more content…
According to Capital One spokeswoman Tatiana Stead, GreenPoint’s loans were considered Alt-A, which are not considered by the industry to be subprime because the borrower’s credit score is usually high. Such loans are not considered subprime, she said, and added that the bank closed GreenPoint shortly after it was acquired. Yet, at least $13.1 billion of GreenPoint’s loans were considered high interest by the Federal Reserve, fitting the description of subprime. GreenPoint was listed as the 23rd largest subprime lender, and as we’ve all learned, these lenders led us to the mortgage crisis and financial meltdown. Less than one year after the acquisition of its mortgage platform, Capital One closed GreenPoint Mortgage during the 2007 subprime mortgage financial