Certainly a rhyming name from the past, as it was Charlie Mitchell's National City Bank (of New York) that helped to trigger the Crash of 1929 and the Great Depression by popularlizing stock ownership on margin amongst overstretched consumers at the latter part of the 1920's. That institution, founded in 1812, is now known as Citibank.
Under Charlie Mitchell the bank expanded rapidly and by 1930 had 100 branches in 23 countries outside the United States. His salesmen sold millions of shares in the bank totaling $650 million, much of which was lost in the 1929 Crash. In 1933 the Senate Pecora Commission investigated Mitchell for his part in tens of millions dollars in losses, excessive pay, and tax avoidance. In November 1929, U. S. Senator Carter Glass said of him, "Mitchell more than any 50 men is responsible for this stock crash."It was the abuses of depositors and investors by National City that helped to bring an end to the ownership of investment affiliates by commercial banks under legislation that become known as the Glass-Steagall Act.
It appears as though this regional incarnation of National City Bank is going down for the count in this cycle of banking failures.
National City Corporation (NYSE: NCC), headquartered in Cleveland, Ohio, is one of the nation's largest financial holding companies. The company operates through an extensive banking network primarily in Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri and Pennsylvania, and also serves customers in selected markets nationally. Its core businesses include commercial and retail banking, mortgage financing and servicing, consumer finance and asset management.
National City under U.S. regulatory scrutiny
Fri Jun 6, 2008 2:48am EDT
(Reuters) - National City Corp, a large U.S. Midwest regional bank, has entered into a memorandum of understanding with federal regulators, effectively putting the bank on probation, the Wall Street Journal said on Friday, without saying where it got the information.
Terms of the confidential agreement with the Office of the Comptroller of the Currency are not known, the newspaper said. The agreement was entered into over the past month or so, the newspaper said.
Neither Cleveland-based National City nor the OCC immediately returned calls seeking comment.
The agreement reflects the growing regulatory pressure that financial institutions face, as they struggle with the fallout from the credit market turmoil.
Memoranda of understanding allow banks to work with federal regulators to address financial problems, without necessarily triggering alarm among depositors. Regulators have been pushing lenders to raise more capital and cut lending risk.
Banking experts estimate that a handful of medium-sized banks have recently entered memoranda of understanding, the newspaper said.
Mounting losses from mortgages and other debt have forced banks such as National City, Citigroup Inc, Wachovia Corp and Washington Mutual Inc to raise capital and cut dividends.
In April, National City raised $7 billion from private equity firm Corsair Capital and other investors, as mortgage and home equity problems led to its third straight quarterly loss.
National City shares closed at $5.35 on Thursday on the New York Stock Exchange. Shares of the company are down about 68 percent year to date. They have fallen 85 percent from a year ago.
(Reporting by Tenzin Pema in Bangalore; Editing by David Cowell)
