The Observation Deck

Tax payers: we are now part owners of PNC

From Forbes: “In keeping with TARP requirements, PNC will sell $7.7 billion in preferred shares and warrants to the government in exchange for fresh capital.â€

Bryan - You've obviously got an axe to grind with Dennis.

You really should go back through the Congressional record and see what he has initiated, opposed and voted on before making the grandstanding assumption.

Did you ever think that Dennis might be one of the people who speak for many of his constituents? Who is sometimes the only standing for us? Have talked to anyone about his constituent services? How he opposed the war from the beginning? How he has compassion and selflessness and is perceived as a kook?

Some of us truly admire him and will stand with him when he stands alone.

Sharon I don't like Dennis. I think he's a failure as a Congressman for his district. I've made no secret about that.

I'm glad you like him. I don't.

That's fine Bryan - each to their own.

Have a great weekend.

Why didn't the government bail out National City Bank?

How much would it have cost to bail out National City Bank?

I watched a film called "King Corn" last night. They trace a giant transforming event in Agriculture to Secretary of Agriculture Earl Butz' "Get Big or Get Out" policy. They ramped up subsidies and managed to put many farmers out of business. It was great for increasing the junk food supply though.

This bailout plan seems similar to that. How are people going to renegotiate their mortgages if the headquarters of the bank is even further away? They aren't. They are going to foreclose.

It didn't bail out NCB because there was a buyer for them - they didn't outright fail.

Its reported that National City was notified that no government funds would be available to them, and in consequence accepted the offer from PNC.

I think that National City was a responsible bank, but felt that they had to increase their size to avoid being bought, so they aggressively entered the sub-prime mortgage business including, I believe, buying a west coast sub-prime unit. They initially had increased earnings, but were placed in jeopardy by the current collapse of that business.

I don't have a problem with one of the largest players in the sub-prime field being burned. There's a lesson there for other bankers. My concern is that the government hand out will mitigate that lesson. Even the hedge funds are now clamoring for government money to get them out of the hole their greed dug.

I don't resent the top executive getting a position at PNC. His credentials may be excellent, and since he was at NCB only a year, I don't think he deserves to be blamed for bad policies that were in place for over 15 years. More credit should go to our congress, which in the guise of helping the disadvantaged, set them, and us, up for a very forseeable crash. All we can do about the greedy lenders is whine; at least we can vote on the politicians.

Brian -

PNC received $7.7 billion via the bailout without which, as a senior PNC executive explained, PNC would not have been able to buy NCB.

Rep. LaTourette doesn't think the deal passes the smell test.

http://blog.cleveland.com/openers/2008/ ... nt_of.html

I'm not sure where to go from here, though. According to The Plain Dealer's analysis, NCB may be somewhere between $10-$20 billion in need (even after the $7 billion it raised from private investers earlier this year). Is the Fed doling out this type of bailout chunks?

David, thanks for posting that. I wonder if this is good news? If there is enough there to halt this sale and take a closer look at it. Basically PNC was getting a "bailout" that instead is being used to buy something more! This seems fishy. If I was asking for a bail out on my house and someone gave me enough money to pay my debts off but instead I go and buy something else with it...that alone seems fishy. If they bought NCB for $5 billion and got $7 billion from the government wouldn't it be cheaper for the taxpayers if the US just gave NCB $5 of bailout money? Put the other $2 billion into a gift certificate or something. Or to me. I would have a ball with $2 billion.

I don't understand it either, Phil. Key is saying it plans to use bailout money to be a buyer.

http://blog.cleveland.com/business/2008 ... out_m.html