Whats sad is that the exec's at the top have golden parachutes.  Not that I blame them, but in this economy, day and age, it sends a bad message to the rank and file employees.

no they don't...since me and you (taxpayers) facilitated this purchase through the "TARP" providng $7B to PNC for the purchase, they are not allowed to pay any "golden parachutes" in this deal...or so that is my understanding from significant discussions yesterday about it.

 

http://blog.cleveland.com/business/2008/10/national_city_execs_get_golden.html

 

I guess now I can shop at Giant Eagle, have lunch at Eat and Park, and bank at PNC.  Are we, like, a suburb of Pittsburgh, or what?  Oops more venting.  I feel better now,  LOL

 

Hilarious...although Ohio is sadly beginning to feel like a suburb of Western PA!  "Guess yunz better head dawntahn to watch dem stillers!"

Ahem - it's "y'inz" and "dahntahn".

 

 

;-)

As more news comes out about this, I think we will learn that this was a forced sale. I don't believe NCB "ran it into the ground". All banks go through cycles. When this much money is involved, I will guarantee you somebody was owed a favor, and somebody got paid.

 

NCB was run into the ground, PNC was not. If you had to dole out $7 billion, who would you give it to, based on each bank's track record? Don't get me wrong - I'm worried sick for my friends who may/will be affected but NCB (their leadership) brought this on themselves.

 

Who would I give it too? Well I wouldn't give to a bank in Pittspuke. But thats just me...

 

 

This whole deal is BS. PNC would not have had the cash if they were not getting 7billion from the bailout. NCB also asked for funds but they were denied. Even though NCB is bigger than PNC in consolidate assets. I saw Voinivich on the news tonite at the ECP dedication, he's all proud of himself. He should spend less time calling Obama a socialist and get his ass back to DC. Can't wait till he's outta there.

 

Freethink is absolutely right.  Why aren't we more up in arms about this? 

 

Clearly banks have no intention of using the $700 billion to free up money for new loans and help the economy recover.

 

From an article in todays NY Times:

 

Friday delivered the first piece of evidence that this is, indeed, the plan. PNC announced that it was purchasing National City, an acquisition that will be greatly aided by the new tax break, which will allow it to immediately deduct any losses on National City’s books.

 

"As part of the deal, it is also tapping the bailout fund for $7.7 billion, giving the government preferred stock in return. At least some of that $7.7 billion would have gone to NatCity if the government had deemed it worth saving. In other words, the government is giving PNC money that might otherwise have gone to NatCity as a reward for taking over NatCity.

 

I don’t know about you, but I’m starting to feel as if we’ve been sold a bill of goods."

 

http://www.nytimes.com/2008/10/25/business/25nocera.html?partner=rssuserland&emc=rss

NCC was a zombie bank. Based on market action Friday, I think 5/3 probably is too. Read about the Japanese crisis of the 90s. The feds are trying to prevent that from happening hear and the way to do that is clear out the banks that while they could continue to exist are so overwhelmed by the bad debt on their books that they do little besides take up space in the market. They can't do all things banks are supposed to do.

"I don't believe NCB "ran it into the ground"

 

Considering that most of the execs who were at the helm during the subprime "feast" are long gone, and left those remaining to deal with the fallout - I'm not sure what else you'd call it. As has been said about so many industries, things in the banking biz are polarizing. There used to be over 30 major car manufacturers in the nation, now there are three(ish). It's not that different.

I guess now I can shop at Giant Eagle, have lunch at Eat and Park, and bank at PNC.  Are we, like, a suburb of Pittsburgh, or what?  Oops more venting.  I feel better now,  LOL

 

Send some Mr. Heros and Winking Lizards across the state line and we'll call it even.  ;)

First I'll say this has made me so ill I couldn't even post on the subject until now.

 

NCC was a zombie bank. Based on market action Friday, I think 5/3 probably is too. Read about the Japanese crisis of the 90s. The feds are trying to prevent that from happening hear and the way to do that is clear out the banks that while they could continue to exist are so overwhelmed by the bad debt on their books that they do little besides take up space in the market. They can't do all things banks are supposed to do.

 

dmerkow perhaps you can help me understand this. If the TARP program was designed to provide relief from the type of bad debt that kept NCC from being a healthy institution, and as recently as this past week 7th largest bank in the country, why were they not given those funds? Conversely why give PNC the TARP money to cover the bad debt of NCC if they acquire them? Does the government believe creation of mega banks is better than competition?

I guess now I can shop at Giant Eagle, have lunch at Eat and Park, and bank at PNC.  Are we, like, a suburb of Pittsburgh, or what?  Oops more venting.  I feel better now,  LOL

 

Send some Mr. Heros and Winking Lizards across the state line and we'll call it even.  ;)

 

whoa boy. so lets not even mention who panini's ripped off!  :wink:

First I'll say this has made me so ill I couldn't even post on the subject until now.

 

NCC was a zombie bank. Based on market action Friday, I think 5/3 probably is too. Read about the Japanese crisis of the 90s. The feds are trying to prevent that from happening hear and the way to do that is clear out the banks that while they could continue to exist are so overwhelmed by the bad debt on their books that they do little besides take up space in the market. They can't do all things banks are supposed to do.

 

dmerkow perhaps you can help me understand this. If the TARP program was designed to provide relief from the type of bad debt that kept NCC from being a healthy institution, and as recently as this past week 7th largest bank in the country, why were they not given those funds? Conversely why give PNC the TARP money to cover the bad debt of NCC if they acquire them? Does the government believe creation of mega banks is better than competition?

 

NatCity is a regional bank. From what I've read, thousands of banks are eligible for relief but I doubt a lot of them want the gov't taking a stake in their company when there are private investors.

^ I was under the impression they asked for relief but were denied. Are you saying they (NCC) never asked for TARP assistance?

I have no idea if they did. I haven't kept close attention. Maybe someone can find it online.

if you read the article in the PD- and as was said to NCB employees - it became clear that NCB was not considered a "strong financial institution" and the government assistance was only going to stronger banks...this whole TARP has morphed from originally buying bad debt to now facilitiating bank acqusitions through the help of taxpayers. 

if you read the article in the PD- and as was said to NCB employees - it became clear that NCB was not considered a "strong financial institution" and the government assistance was only going to stronger banks...this whole TARP has morphed from originally buying bad debt to now facilitiating bank acqusitions through the help of taxpayers.

 

If you ask me, they aren't doing these large banks much of a favor. The government basically did a hostile take-over and forced them to take the money. That means salary sanctions and a cut of the profits for the government. Legislators were outraged that AIG even spent roughly 150k excessively on spa treatments for executives in a department for life insurance. I sure wouldn't want that kind of nannyism.

Washpost reported (shoot just closed the link) that NCC was turned down for TARP money. The whole buying bad debt part of TARP is so last week, this week the feds are sticking treasury notes directly in bank vaults and telling the winners to write off the bad debt of the losers at true current market prices, basically pennies on the dollar (rather than any of the versions of market that they would have had to create before).

 

I'm going to do a little research, but I'm pretty sure NatCity was complicit in the destruction of Toledo's banking system during the Great Depression. I'll get back to y'all.

MayDay-You seem to be interested in placing blame. I am not concerned with who is at fault. It is not relevent to the solution.

To me this is an abuse of power. Much like when the president was given the authority to go to war and we were told that everything will be done to avoid that conflict. But the administration clearly had a different agenda. This bailout bill is not being implemented as it was designed. As it was sold. We fell for it again.

Below is an article from the Associated Press today:

 

Uses for $700B Bailout Money Keep Changing

 

WASHINGTON —  First, the $700 billion rescue for the economy was about buying devalued mortgage-backed securities from tottering banks to unclog frozen credit markets.

Then it was about using $250 billion of it to buy stakes in banks. The idea was that banks would use the money to start making loans again.

But reports surfaced that bankers might instead use the money to buy other banks, pay dividends, give employees a raise and executives a bonus, or just sit on it. Insurance companies now want a piece; maybe automakers, too, even though Congress has approved $25 billion in low-interest loans for them.

Three weeks after becoming law, and with the first dollar of the $700 billion yet to go out, officials are just beginning to talk about helping a few strapped homeowners keep the foreclosure wolf from the door.

As the crisis worsens, the government's reaction keeps changing. Lawmakers in both parties are starting to gripe that the bailout is turning out to be far different from what the Bush administration sold to Congress.

In buying equity stakes in banks, the Treasury has "deviated significantly from its original course," says Alabama Sen. Richard Shelby, the top Republican on the Senate Banking, Housing and Urban Affairs Committee. "We need to examine closely the reason for this change," said Shelby, who opposed the bailout.

The centerpiece of the Emergency Economic Stabilization Act is the "troubled asset relief program," or TARP for short. Critics note that tarps are used to cover things up. The money was to be devoted to buying "toxic" mortgage-backed securities whose value has fallen in lockstep with home prices.

But once European governments said they were going into the banking business, Treasury Secretary Henry Paulson followed suit and diverted $250 billion to buy stock in healthy banks to spur lending.

Bank executives hinted they might instead use it for acquisitions. Sen. Christopher Dodd, chairman of the Senate banking committee, said this development was "beyond troubling."

Sure enough, a day after Dodd, D-Conn., made the comment, the government confirmed that PNC Financial Services Group Inc. was approved to receive $7.7 billion in return for company stock. At the same time, PNC said it was acquiring National City Corp. for $5.58 billion.

 

Here is a link to the rest of the article  http://www.foxnews.com/story/0,2933,444038,00.html

 

 

I'm troubled by this as well.  The government should not be funding M&A.  This only provides an incentives to do deals that might not otherwise make good business sense.

 

The previous poster was right about the hostile nature of the gov't cash injections.  JPM didn't need equity.  In fact, they had just raised another $10 billion through a secondary offering.  But the gov't basically told all the top dogs they had to buy in.

 

When the dust settles, you should expect some WTO action on this front too.

 

How many jobs does everyone think we will probably loose in the downtown office???

 

Will there even be a large presence down there????

I'd fall in with those who argue that things are actually much worse off in the banking sector than we know. I'd venture that a bunch of the supposedly safe investments the banks made are actually worthless, even tier one capital. So we've got a banking system that is essentially bankrupt, so the feds are trying to deal with that without scary the beejesus out of all us peons.

dmerkow,

 

are you in banking?

No, but I know a couple folks who are and I've spent most of the last year studying the system for a project (on suburbia and the crash).

KeyCorp (KEY, Fortune 500), based in Cleveland, said Monday it has been approved "to bolster its capital position" with $2.5 billion from the Treasury's Capital Purchase Program.

"MayDay-You seem to be interested in placing blame. I am not concerned with who is at fault. It is not relevent to the solution."

 

I'm simply saying that had the execs at National City exercised some restraint, it wouldn't have been so decimated by the fallout. Yes, the fact that bailout funds are being used to aid M&A's is disturbing but what's done is done. National City is gone, it's not coming back and that didn't have to be the case - had better judgement been exercised, National City could have been in the position to receive TARP funds rather than be acquired. From cleveland.com:

 

http://blog.cleveland.com/business/2008/10/the_events_that_led_to_nationa.html

 

Four key periods led to National City sale

Posted by rmezger October 27, 2008 00:01AM

 

The sale of National City to PNC Financial Services has its roots in decisions made years ago.

 

As Northeast Ohio tries to digest the demise of National City Corp., one of Greater Cleveland's oldest companies, the simple question arises: Why did it happen?

 

More at http://blog.cleveland.com/business/2008/10/the_events_that_led_to_nationa.html

 

Well, this is our tax dollars at work to undermine our local economy.  I see this as unforgivable.

 

And where is Kucinich in all this? Our boy is busily fighting made-up issues like the Euclid Corridor causing RTA's fare hike yet hasn't said a peep about federal funds being used to take 4,000+ jobs out of Cleveland. Way to go Dennis.

^Oh, I'm sure he'll have a press conference at the corner of Euclid and 9th - after all it's a business shutting down!

^Dennis was quoted in yesterdays PD on the matter. 

 

"Without regard to the economic and psychological impact on our community, Treasury made a coldly calculated decision to push National City off the cliff and use our tax dollars to help another bank scrape up the remains," said Rep. Dennis Kucinich, a Cleveland Democrat who voted against the bailout.

^Dennis was quoted in yesterdays PD on the matter. 

 

"Without regard to the economic and psychological impact on our community, Treasury made a coldly calculated decision to push National City off the cliff and use our tax dollars to help another bank scrape up the remains," said Rep. Dennis Kucinich, a Cleveland Democrat who voted against the bailout.

 

Didn't National City refuse because it chose to merge with PNC? Between the election and the economy I can't keep up with everything  :-o

How, or maybe more appropriately, who, decides which banks are saved and offered assistance, and which ones do not?

 

Something tells me that if Paulson had close ties to the National City brass, they'd have been offered assistance...much like his friends did at goldman sachs

From the KeyBank thread's original post/press release:

 

"National City Corp.'s rejection for Treasury money is what led to its sale Friday to PNC Financial Services of Pittsburgh."

 

I guess I read it wrong and thought NatCity rejected it. I guess that wouldn't make sense anyway, since banks have to apply - minus the larger ones who were forced.

Facilitating the closure of an economic anchor in an already depressed area doens't seem like sound recovery policy.  But ever since Gramm-Leach-Bliley passed the goal has been consolidation of the financial sector.  They're plowing ahead with it unabated.

 

Every bit of severance pay allotted for the captains of these scuttled ships should be split among those getting laid off.  When the people who caused the problem don't get held accountable, it gives the impression that nothing has been learned from all this.

Don't get me started on Dennis...

 

It really does look like some game of Duck duck goose, with obscene amounts of capital, with the Treasury going around tapping banks on the head saying, Duck-here is some money, Duck - here is some money, goose, no money for you. You are going to be bought.

 

 

Well well well, once again Steven LaTourette does something beyond grandstanding - Dennis?

 

From cleveland.com

WASHINGTON -- Bainbridge Township GOP Rep. Steven LaTourette is seeking Treasury Department and congressional investigations into whether Comptroller of Currency John Dugan steered $7.7 billion of taxpayer bailout money to his former client, PNC, so it could buy National City Bank.

 

LaTourette noted that before being sworn in as the nation's primary banking regulator in August 2005, Dugan represented Pittsburgh-based PNC as an attorney in the Washington law firm Covington and Burling.

 

More at http://blog.cleveland.com/openers/2008/10/latourette_fears_government_of.html

^Absolutely there needs to be an investigation. This was the fear to begin with. If you offer up taxpayer dollars without the strictest of oversight there will be corruption. The TARP plan had fewer guidelines than subprime lending 3 yrs ago.

I wonder if the funds can be held, until an investigation is complete, and possibly used to keep NCC as a stand alone bank?

I'll ask again, who is repsonsible for deciding which banks are given government aid and which do not? And what factors are used in making the determination?

I'll ask again, who is responsible for deciding which banks are given government aid and which do not? And what factors are used in making the determination?

 

Seems to me that it's in the hands of the Secretary (Paulson),the comptroller (Dugan), and those that can influence the aforementioned; which can be a number of unknown power brokers lining up for the free money.

Well well well, once again Steven LaTourette does something beyond grandstanding - Dennis?

 

Thank you LaTourette, and boo to all members of the Northeast Ohio delegation who haven't done anything.

This is a load of crap, something has to be done.  Has the deal already been signed on the dotted line, and does that matter, is there anyway this can be turned around, or at least investigated?

My only question is why do people always discover this stuff after the fact.  Kudos to LaTourette for bringing this information up and I do respect him for that.  However, was all of this discovered over the weekend...

When this much money is involved, I will guarantee you somebody was owed a favor, and somebody got paid.

 

From the article MayDay posted above:

 

WASHINGTON -- Bainbridge Township GOP Rep. Steven LaTourette is seeking Treasury Department and congressional investigations into whether Comptroller of Currency John Dugan steered $7.7 billion of taxpayer bailout money to his former client, PNC, so it could buy National City Bank.

LaTourette noted that before being sworn in as the nation's primary banking regulator in August 2005, Dugan represented Pittsburgh-based PNC as an attorney in the Washington law firm Covington and Burling.

"I am very concerned that the Comptroller first deprived bailout money to National City Bank and then orchestrated its sale to his former client, PNC," LaTourette said in a news statement. "The officials at PNC have made it very clear that they were only able to buy National City because they got a $7.7 billion handout from the federal government."

 

Exactly.

My understanding is that oversight of bank mergers is the purview of the fed reserve as well as the treasury and the comptrollers office, not sure about the SEC. Question; how can oversight occur if they're the ones forcing the merger? In normal times a merger would require a 2/3 majority of stock holders from both banks, as well as the approval of the aforementioned agencies. If there were an ongoing investigation certainly the merger would not be finalized until the investigation was concluded. Every last Ohio elected official needs to press for this investigation, regardless of party affiliation. IMO this is not just bad for Cleveland or Ohio, it sets a dangerous precedent for the use of TARP money.

Per WCPN this morning, Latourette is on the BANKING Committee, so of course he should handle this.  This isn't some function of Kucinich misfeasance so don't turn it into something it isn't.

 

Also per WCPN this morning, National City was taken over as a preemptive move before National City totally collapsed and the obligations were turned over to the taxpayer through the FDIC.

 

The 9:00 show is on now and it will be archived at www.wcpn.org

 

 

Well well well, once again Steven LaTourette does something beyond grandstanding - Dennis?

 

Thank you LaTourette, and boo to all members of the Northeast Ohio delegation who haven't done anything.

my spouse visited our friends in dayton, one of whom is a mortgage guy. his spouse worked at ncb for years until she became a mom. needless to say, they were really up in arms about all this. the ex-ncb employee lost all her pension or ncb-related investment. they are financially devastated. sigh...just another story of how real people we all know are immediately affected.

Thank you Mr Latourette. Hopefully something can come of this. http://www.newsnet5.com/news/17817518/detail.html

Latourette had me a little riled on the private-property-trumps-great-lakes thing, but he did a great job on DoD and he's doing a great job here.  We can't have most of NCB HQ losing their jobs just because a few powerful people screwed up.  In general, I don't understand how the feds are helping the big picture by facilitating mass layoffs.  We need stronger cities more than we need stronger banks.   

I also worry that in consolidating banks we make the system more susceptible to catastrophic failure in the future.  In most things, diversity brings stability.  The Fed doesn't seem to think so with banking.  I don't understand why.  I was starting to think that I was the only one who didn't agree with this rush to consolidation, but David Brooks quotes an economist/author in his editorial in the NY Times today who says the same thing. 

 

Hasn't it been the larger banks that have faced the most instability in this crisis?  We want to make fewer still, and larger banks because of this?

this isn't the first industry to go thru this.

 

Banks

Auto tire manufactures

Airline manufactures

Airlines

Music Entertainment Business

Movie Theatre houses

Movie Studios

Gas/Oil Company's

Elevator manufactures

Railroads

Rail transportation systems

 

 

and the list goes, on-and-on-and-on. 

 

The weak are eaten/taken over.  You know as Doc Broc says, ""Thinning the Herd" aka "Natural Selection""  :wink: