This is a tale of two cities and two banks. One bank, PNC (headquartered in Pittsburgh) very healthy (at the time), no need for federal TARP money and the other, National City (headquartered in Cleveland) sinking slowly into the abyss, desperately in need of TARP assistance. Both cities similarly situated economically.
National City Corporation was based in Cleveland, Ohio and founded in 1845, used to be one of the ten largest banks in America in terms of deposits, mortgages and home equity lines of credit. National City was expecting to be successful in their request for TARP money, however surprised in Washington; it was a Comptroller of the Currency, John Dugan, who informed National City executives they shouldn’t apply because their bank was too weak. Instead, he told the bank to sell itself.
PNC set their greedy eyes on National City. PNC was the first U.S. bank to use money obtained under the government’s $700 billion bailout program to make an acquisition. The acquisition, which completed on December 31, 2008, was described as a “take-under,” meaning the purchase price was below National City’s market value.
PNC Financial Services Group Inc. said Tuesday, just a little more than three months after receiving $5.6 billion, (yes billion with a “B”), that it plans to cut 5,800 jobs. PNC didn’t need to “take-under” any bank they just became greedy. Had the TARP funds had gone to National City as requested, I believe the National City would have recovered and jobs for both cities would have been preserved.