Thursday, December 4, 2008
In the continuing saga of downward spiral business news in Northeast Ohio, the announcement on October 20th that PNC Bank would be taking over the grand dame of Cleveland financial institutions, National City Bank was viewed by others as just another casualty in the falling dominoes of the economic crisis.
In Cleveland, however, this news was met with the kind of response usually reserved for funereal marches and finales of Cleveland Browns games. As an utter laymen in terms of financial jargon and complicated finance, my questions, like many, were simple:
'Why could PNC buy National City for $5.6 billion then get a TARP bailout by the government of $5 billion?'
'Why wasn't National City considered for that $5 billion to stave off collapse just like dozens of other financial institutions around the country? '
Even though frought with previously announced dire financial numbers like most other institutions, as late as September 29th Fortune online was proclaiming National City's tier one capital ratio (a good thing, take my word for it) as "as the highest among large banks".
Dozens of other questions come to mind, but those two sum it up. Steve LaTourette, a Republican congressman from Bainbridge has been picking fights in an attempt to block the sale, with everyone from Henry Paulson, the increasingly embattled Treasury Secretary, to the Comptroller of Currency (whoever the hell that is). Of late, Dennis Kucinich has entered the fray, either adding credibility to the cause or destroying it, I'm not sure which...
In any case, here's the bottom line if the deal goes through:
1. Cleveland loses another Fortune 500 Company, to a Pittsburgh company, no less (ouch).
2. Estimates are that 8,000 jobs could be lost locally (double ouch).
3. Any way you slice it, Cleveland is getting screwed while other companies, in more affluent locations (yes, as hard as it is to say it, even Pittsburgh is more affluent) are getting the golden ticket from Willy WonkaMcTreasurySecretary.
4. There will be no Christmas in Whoville* (*Cleveland; although that's just hyperbole).
Can't we catch a break... anywhere?