Capital One Discontinues Some Loans
Capital One Discontinues Some Loans
According to spokesman Steven Thorpe, Capital One Bank has indeed stopped offering both not secured, CD-backed loans and savings-backed loans in the Baton Rouge market.
Thorpe stated it was a decision that was not easy and concluded after much deliberation. In addition, he said that they will still offer consumer lending products at reasonable rates in the market, such as secured credit cards, equity loans, auto loans and mortgage loans.
Last Monday, Capital One stopped receiving applications for the loans that the bank stopped offering. Patrick Mendoza, the regional spokesman of Capital One, said that loans they stopped offering where only a small segment of their business in the part of Baton Rouge.
Moreover, the directors of Capital One have decided that the income from this line of business is not enough to secure the investment expected to expand the business. The change will not have a huge impact on the consumers who have these loans.
Willie Staats, LSU professor in banking and finance, was a bit shocked at the discontinued loans of Capital One. However, he says that all financial institutions have a new outlook brought about by the Dodd-Frank Act.
Since the main objective of banks is to have greater profits and efficiencies to compensate for their expenses, products which do not meet this objective will be discontinued. Also, Staats estimates that other banks will also make modifications in their own products.
As of the moment, banks have two choices, either to increase their fees or to be more efficient, and strengthen the products they are good at.
In the previous month, Capital One has declared the positions of Steve Lousteau and Scott Ridley will end at May 1. They are both group executives for retail and business banking in their branch at Greater Baton Rouge.
The dismissals of the positions are only a part of a bigger reorganization plan by the bank that will result to dismissal of more or less 30 other executive positions nationwide.
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