Taxpayers back PNC's National City play
Acquisition to make PNC fifth-largest bank
By Inman News, Friday, October 24, 2008.The U.S. Treasury will take a $7.7 billion stake in PNC Financial Services Group Inc. to facilitate its purchase of troubled Cleveland, Ohio-based National City Corp.
Pittsburgh-based PNC is among the first regional banks to take advantage of the $250 billion the Treasury has earmarked to "recapitalize" banks by buying nonvoting preferred shares under the $700 billion Trouble Asset Repurchase Program, or TARP. Half of the money has already been allocated to nine of the nation's biggest banks (see Inman News story).
At a hearing Thursday, Senate Banking Committee Chairman Sen. Chris Dodd, D-Conn., told Bush administration officials that he was concerned about reports that banks might use the money to fund acquisitions, rather than boost lending to businesses and consumers (see story).
Another regional bank, Georgia's SunTrust Banks Inc., has authorized the sale of $1.6 billion to $4.9 billion in preferred shares to the U.S. Treasury, SunTrust officials said in announcing a 25 percent decline in profits driven by losses in mortgage lending.
Mortgage losses were also a drag on National City's bottom line -- the bank announced a $729 million third-quarter loss Tuesday -- despite the sale of its subprime lending subsidiary, First Franklin Financial Corp., in 2006. After selling First Frankin, National City tried to expand into Florida, buying two banks in a state that has since become one of the hardest hit by foreclosures during the housing downturn.
National City, which retained $7.3 billion in loans originated by First Franklin, was forced to cut 3,400 jobs in 2007 (see story), and the bank's future was in doubt.
PNC said its $5.2 billion acquisition of National City is expected to close by the end of the year, making it the fifth-largest U.S. bank by deposits and the fourth-biggest in number of branches. PNC will have the largest share of bank deposits in Pennsylvania, Ohio and Kentucky, and the second largest in Indiana and Maryland.
PNC expects fair value adjustments and provisions for future losses of National City's current loan portfolio will bring the cumulative losses on the loans to approximately 17.5 percent.
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Submitted by Michael LittleBig on October 26, 2008 - 2:43pm.
Ohio Senators George Voinovich and Sherrod Brown made it possible for PNC to buy National City(Cleveland Ohio) based on their votes to approve the last bailout package (TARP) which supposedly was to capitalize banks and stabilize the credit markets. Senators Voinovich and Brown also made it possible for AIG to use thousands upon thousands of dollars to party with their employees and customers. They made it possible for Wall Street to resume big bonuses for their multitudes.
It is worth to note that these two elected officials has participated in passing legislation
of almost 2 trillion dollars to support the wealthy and powerful who make an obscene profit at the expense of the American public and then blame the American public for their down fall.
While Mr. Voinovich and Mr. Brown have been diligent in their effort to keep the wealthy and the powerful financially healthy with billions of dollars there has not been one penny for the homeowner. These two charlatans have passed no legislation regulating the aberrant behavior of these federal mortgage lenders that have wreaked financial havoc which resulted in this housing meltdown. The only homeowners that discover that they have no protection to object or contest to their foreclosure within the federal regulatory system that these banks lend their mortgage money is when they are in foreclosure. The American public have yet to learn that the government can not force these banks to negotiate or comprise on any level with their mortgage borrowers. As I see it the new legislation where the government buys bad mortgages ensures unethical and ruthless treatment of the borrower and eliminates any risk or loss for the lender. The hollow plea to keep the homeowner is their home is not for compassion of the individual but rather to retain the real estate tax income for government and maintain the real estate economic condition for the lender.
As a direct result of the lack of due diligence by Brown and Voinovich there has never been Federal Consumer Banking Regulations legislated to give the mortgage borrower a real voice to defend themselves against the lenders wrath. Accordingly Senators Brown and Voinovich have protected the Lynch Mob mentality of these lenders in foreclosing the mortgage and hanging the borrower. Note that Senator Brown sits on the Senate Banking Committee.
As I read there have been 4 million foreclosures and CNN reported that there are 5 million facing foreclosures and 7.5 million underwater. Brooking Institute said there will be an additions 2 million foreclosures just in 2009. Keep in mind that Ohio is where it all
started and is know as the foreclosure epic center. None of these victims have a voice.
Victim is defined as one who trusted their banker who took advantage of them for financial gain.
With all due respect for the Ohio Senators elected position, they both have demonstrated that the interest that they serve is their own and not those of the Ohioans that elected them.
The question for you is, how did your elected representative vote ?
Michael Little Big
10-25-08