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Nat City Gets TARPed
It was only a matter of time for National City Bank. The subprime inflicted damage and bad financial outlook took its toll on the local banking mainstay. The news we had all been waiting for finally hit this morning. The buyer, PNC a Pittsburgh based bank with backing from the U.S Treasury, is plopping down a mere $5.6 billion for National City. The deal is being aided with funding from the government bailout program (from Marketwatch):
The Cleveland bank whose name is festooned on several downtown buildings and inside Cleveland Browns Stadium has been in trouble since early this year. The cash infusion from a private equity firm this spring wasn't enough to keep National City's stock price from sliding into Hades and setting off warning bells in the local business community.
As we are seeing first hand that the Treasury program is a neutral arbiter of the needs of the macro level players of the financial system. The bailout was not intended to rescue the real economy. The inhabitants of the ground floor are powerless observers of the sea changes that are happening as the financial sector reconfigures itself. The worried looks on the faces of Nat City employees that I see on East Ninth Street and the North Coast Express have turned to quiet resignation. There's not much that can be done other than wait and see if their jobs will be eliminated (some probably have an inkling). The damage to the 401k plans has already been done and now careers of hundreds of employees, taxpayers and consumers are about to be drawn into the turbulence.
PNC also said it plans to sell $7.7 billion of preferred stock to the Treasury under the government's Troubled Asset Relief Program, or TARP.The U.S. Treasury giveth and PNC taketh your locally headquartered bank away. Talk about unintended consequences of of the bailout plan. The very plan that was designed to salvage the banking system has also hastened the loss of local prestige and an untold number of good paying jobs. This new facet of the Treasury plan includes using up to $125 billion in funds to shore up large banks, like PNC. As usual with corporate mergers,Northeast Ohio gets caught on the short end of the deal.
The Cleveland bank whose name is festooned on several downtown buildings and inside Cleveland Browns Stadium has been in trouble since early this year. The cash infusion from a private equity firm this spring wasn't enough to keep National City's stock price from sliding into Hades and setting off warning bells in the local business community.
As we are seeing first hand that the Treasury program is a neutral arbiter of the needs of the macro level players of the financial system. The bailout was not intended to rescue the real economy. The inhabitants of the ground floor are powerless observers of the sea changes that are happening as the financial sector reconfigures itself. The worried looks on the faces of Nat City employees that I see on East Ninth Street and the North Coast Express have turned to quiet resignation. There's not much that can be done other than wait and see if their jobs will be eliminated (some probably have an inkling). The damage to the 401k plans has already been done and now careers of hundreds of employees, taxpayers and consumers are about to be drawn into the turbulence.
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