As one research report put it, the reaction to news that regulators had begun to scrutinize Capital One Financial is handling the subprime loans in its portfolio was "swift and unforgiving," sending Cap One stock down 33%, while unsecured debt widened up to 250 basis points for five-year paper. Although the reaction in the asset-backed market was significantly less drastic, with spreads widening seven to 10 basis points on the news, many thought the cheapening of Capital One's fixed-income securities was an over-reaction on the part of the investment community.

While heightened regulatory supervision among credit card issuers has been a precursor to more severe actions lately, this announcement was viewed by some as a buy opportunity for Capital One equity, debt securities and ABS.

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