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Jobs, Jobs, Jobs.... Capital One to create... JOBS?!?
Move over Matt Taibbi  - you had Goldman Sachs, but Capital One is mine!
It is quite ironic that a financial corporation that eliminated over 5,000 jobs since the start of the economic crisis is holding the jobs carrot out there to entice lawmakers into rubber stamping the acquisitions of two other financial corporations, ING and HSBC, into one great big "too big to fail" traveling pawnshop in your pocket. What is not being said is that those jobs that are being “created” (try relocated - that's a better word for what Capital One does) are part of a $7.1M incentives package that the taxpayers of Delaware are subsidizing (not to mention the taxpayers will be funding at the federal level when considering Capital One will also receive a 115.1% tax credit for each of the acquisitions of the two corporations). But let’s go back to 2004 when Capital One eliminated 1,100 jobs in Tampa, Florida’s call center after having received $3.85M in tax incentives from 1995-2004 - then shipped the Tampa jobs OVERSEAS ,and  (another moniker of the “Bush Tax Cuts”[ 5] that allows corporations to avoid taxes on foreign made income while paying lower wages to overseas workers [and you do know corporations are now lobbying for a tax-free holiday to bring that money home too, don’t you?]).
The “Bush Tax Cuts” went into effect in October 2005.(See sections pertaining to taxation of capital gains [i.e., CEO Richard Fairbank’s compensation structure that allows him to pay taxes at 15%, if at all, verses 35%, the current high-end tax bracket] and tax credits of 115.1% for corporate acquisitions). In November 2005, Capital One acquires Hibernia National Bank of New Orleans for $4.9 billion. That same year, Capital One CEO Richard Fairbank (is this a pseudonym?“Rich Fair Bank”) is awarded a compensation package worth $56.7M. 
In March 2006, Capital One acquires North Fork Bank for $14.6B  to use deposit accounts as leverage to purchase North Fork Bank’s mortgage arm, GreenPoint Mortgage, for $13.2B (known for its jumbo alt-A [less than prime, high interest rate mortgage origination unit]) in December. That same year, Fairbank receives a total compensation package worth $249.42M  (partially from taking advantage of the Bush Tax Cuts by cashing in past stock options and equity awards – note that from this point forward Capital One stocks decrease in value from, on average, $80/share to its current price [October 2011] of, on average, $40/share). (See author’s article on Capital One and Tax Evasion  for a more detailed discussion). Fairbank’s 5-year aggregate total income was $448.58M between 2001-2006. Id.
In June 2007, amid the mortgage crisis, Capital One shudders an arm of its mortgage lending section (the only portion of its lending that has a truly valuable underlying asset [although less profitable] – whereas credit cards [although more profitable, are unsecured] and automobiles [which depreciate and are “underwater” the first 3 years] are “riskier” loans) and lays off the 1,900 employees it acquired as part of the GreenPoint/North Fork acquisitions.  Fairbank is quoted regarding the cuts as stating, “"[d]isciplined expense management is essential to maintaining and enhancing a strong competitive position in each of our businesses. Additionally, improved operating efficiency will help us drive sustained earnings growth, especially as we navigate the current interest rate cycle and normalizing consumer credit trends." Id. That same year, Fairbank receives a total compensation package worth $73.17M for a 5-year aggregate total of $379.57M between 2002-2007. 
March 2008, Capital One lays off 163 in New Orleans, 11 in Shreveport, and 23 in Houston, Louisiana (some effective 2009);  although increases its lobbying expenditures to $1.1M, which nets Capital One $3.6B in TARP payments (a 193,944% return on investment) in November of that same year.  In December, only one month after receiving TARP funds, Capital One announces its intentions to acquire Chevy Chase Bank.
In February 2009, Capital One completes the merger with Chevy Chase Bank (presumably, to gain access to its lucrative customer deposit accounts). That same month, due to a legislative crackdown on excessive corporate pay, Fairbank renegotiates his compensation contract which bans him from cashing out equity awards while the federal government owns a stake in the company.”  However, as part of that negotiation he is granted stock options at 200% of market value for $18.28 per share that would later net him a profit of $16.3M.  In April, Capital One lays off 60 employees in Richmond and McLean, Virginia.  In May, total job reductions reach 143 in Virginia as part of a national layoff of another 1,900 employees.  By June, Capital One repays the $3.6B TARP  funds (presumably to avoid Federal Regulations and scrutiny regarding executive compensation). July/November, Capital One announces 180 layoffs in Baton Rouge, Louisiana.  This puts Capital One under investigation for repaying TARP funds while laying off employees and when computing executive compensation. 
In May 2010, Capital One layoffs 424 employees in Maryland to relocate 223 of those positions from Prince George and Montgomery County to Plato, Texas,  effectively eliminating the employees it acquired following the acquisition of Chevy Chase Bank in February 2009. Id. September/December, Capital One announced it plans to lay off 29 employees in Mattituck, New York (employees it acquired from its 2006 acquisition of North Fork Bank).  October/November, Capital One lays off 66 employees in Tampa, Florida.  Fairbank received a total compensation package reportedly equal to $14.9M in stock options for a total accumulated paycheck, when cashing in past-expired stock options, of $143.6M. 
In June 2011, Wilmington, Delaware braces for layoffs following the planned acquisition of ING and Capital One’s announcement that it would “consolidate” some positions within both banking units to save $290M, but the layoffs would be “modest.”  Presumably, between June and August Delaware struck a deal to offer Capital One an incentives package since in August Capital One warns Maryland’s State Department it plans to lay off 54 employees starting in October 2011.  In September, Delaware announces it has offered Capital One $7.1M in tax incentives to reverse its layoff position and “create” 500 new jobs.  Capital One then announces at the public hearings regarding the acquisition of ING possibly violating the provisions of Dodd-Frank that it will “create” 500 new jobs in Delaware (ironically, where both of the two corporations it hopes to acquire, ING [where it has its U.S. headquarters] and HSBC [which cut 500 jobs the previous spring] are located). If the merger goes through, those 500 jobs will be “created” by 2013. In exchange, Capital One expects to “receive $5.6 million from the state and a rebate of up to $1.5 million for local capital expenditures.” Granted, the tax incentives and rebates have not been approved by the state panel as of yet. Note $14,200 of each “new” employee’s salary will be paid for by incentives (minimum wage is $15,288). Also, note that the $1.5 million for local “capital expenditures” are already to be written off at the federal level for 115.1% of the cost of acquisition under the Bush Tax Cuts.
One can hope Delaware has done its homework since it is highly probable that as soon as Capital One’s “incentives package” expires, it will likely be pulling out of the state and in search of its next incentive. Now mind you, Capital One is also receiving a federal tax credit on the acquisitions (unless the Bush Tax Cuts are not renewed and regulators either shelve or stall the deals – one can only hope!). In the meantime, the Delaware state panel should seriously consider a “claw-back” provision if the mergers of Capital One/ING/HSBC goes through (if not downright deny it in the first place). Delaware would most likely be depleting its tax coffers by extending incentives to Capital One which Capital One will probably use to finance the “winding down” and restructuring of ING and HSBC to prepare for a future move following acquisition. Delaware would benefit more by offering those incentives to corporations that are likely to stay long after the incentives package expires or funding the layoffs of the current employees effected in the first place.
Dangling the “jobs” carrot is not truly worthy for Capital One to mention – they should actually be embarrassed. Shifting jobs from one location to another is not “creating” jobs, it is “relocating” jobs! And when there is an incentive to “relocate” an employment base, it is not “creating” jobs by employing those who are already employed by the corporations being acquired – that is called “retention.” Capital One is actually getting a break in overhead for employee expense that it was already paying, but is now “relocating” to “create” elsewhere. They are not being altruistic here and this announcement is highly deceptive. Altruistic would be to cut bloated executive compensation, lobbying, and campaign contributions – all of which have increased while layoffs mounted. For every $1M spent, 40 jobs could have been saved. And after taking a salary of $249.42M in 2006, surely a few million fell out of your pocket into the couch cushions if you’d ask the maid to give it a toss!
For related topics, please see the author’s other HubPages articles.
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