Early Briefing: Capital One Warns of More Defaults
*Capital One said profit in the second quarter fell by 40 percent and warned that more customers are defaulting on their loans. The McLean financial giant, which in recent years has diversified operations by adding retail banking and auto lending services, blamed the economic downturn for the rise in defaults and said the trend is expected to continue through the end of the year.
"We view the scenario as consistent with the views that the U.S. is in recession," Gary Perlin, Capital One's chief financial officer, said in a conference call with analysts.
*Treasury officials and senior lawmakers are still trying to find a way for the government to invest in Fannie Mae and Freddie Mac without exposing taxpayers to massive losses. People close to the talks said Treasury Secretary Henry M. Paulson Jr., House Financial Services Committee Chairman Barney Frank (D-Mass.), and leaders of the Senate Banking Committee are considering a plan that would allow the government to buy senior preferred shares in Fannie Mae and Freddie Mac if the firms' financial condition were to deteriorate dramatically. That would mean taxpayers would get any payouts before other shareholders when the firms returned to financial health, the sources said.
*MacroGenics of Rockville bought cancer drug developer Raven Biotechnologies of South San Francisco, Calif., whose merger with VaxGen was ditched earlier this year. Neither Raven nor MacroGenics have had any products reach market yet, but MacroGenics chief executive Scott Koenig said the acquisition will allow both companies to speed that process.
*Over the past two years, at least 10 Washington companies have won more than $100 million in prime government contracts set aside for small businesses in economically distressed areas by claiming they had residency in those communities. A Government Accountability Office report released Thursday challenged those claims and said the agency plans to ask the Small Business Administration's inspector general to investigate.
July 18, 2008; 5:00 AM ET
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