Triage by government officials — including arranging the sales of Washington Mutual Inc. and Wachovia Corp. — is designed to steady the financial services industry.

But rather than providing relief, the moves may instead be contributing to a "who's next" mind-set.

"It may be totally irrational, but the market is calling the shots right now — not reality, not solvency, not anything else," said Nancy Bush, the president of NAB Research LLC, in an interview Tuesday. "So no bank, with the exception of a few of the biggest, can say right now that it's invulnerable."

Indeed, investors have turned their skeptical eyes on National City Corp., the Cleveland banking company wounded by faltering mortgages.

Its shares plunged 63% Monday after the House rejected the Bush administration's bailout plan, forcing lawmakers in favor of it to plead for more support and a second vote by week's end.

The speed of this domino effect has been startling. In the space of 11 business days, Lehman Brothers Holdings Inc. went bankrupt, the insurer American International Group needed a government bailout, Washington Mutual Inc. failed and surrendered its bank to JPMorgan Chase & Co., and then Wachovia Corp. fled into the arms of Citigroup Inc., assisted by regulators.

"It wasn't an imminent problem of failure with Wachovia — they had the deposits, the geography. I wouldn't have picked them as being next if you'd asked me a week ago," Ms. Bush said. "But the fact is, regulators are worried about a run on banks, and they are picking and choosing their spots where there is concern about a run, because if we get a full-fledged run on banks, we are toast. So if the market thinks you're vulnerable, you don't really know if your bank is next."

Now, with a $700 billion federal bailout of banks' toxic mortgage assets in limbo, the markets are expecting a continuation of the consolidation-before-a-run trend.

The $154 billion-asset Nat City has recorded three straight quarterly losses, including a record $1.76 billion in the second quarter, due in large part to a loan-loss provision of $1.6 billion.

The Wachovia deal contributed to the plunge in Nat City's shares Monday, observers said, because some viewed Nat City as standing alongside Wachovia in the line of vulnerable banks.

So what happens if a financial rescue isn't approved soon? It depends upon whom you ask.

Nat City staunchly defends its capital levels, noting it raised $7 billion in April and lifted its Tier 1 capital ratio above 11%, the highest among regional banks in the country.

It has downsized its mortgage business, reduced its work force steadily since last fall, and says it is in no danger of failing and does not need a buyer. It also has hired an executive to handle the disposal of bad assets.

Nat City spokeswoman Kristen Baird Adams said Tuesday that the company is the victim of "outright irrational speculation and investor panic," owing to uncertainty in Washington and unfair comparisons to Wachovia and Wamu. She said it has no exposure to option adjustable-rate mortgages, the home loans that scarred Wachovia and Wamu.

Nat City has "more than sufficient" capital and liquidity to survive "as an independent institution," Ms. Adams said.

Several analysts agree.

Terry McEvoy of Oppenheimer & Co. Inc. on Monday upgraded Nat City's stock from "market perform," to "outperform," citing what he views as capital strength and an undervalued stock.

Paul Miller, an analyst at Friedman, Billings, Ramsey & Co., made the same upgrade Monday, and in a note to clients he wrote that a sell-off in Nat City's stock — including a 26% drop last Friday — "is overdone." He also noted that Nat City's shares plunged after the failure of IndyMac Bancorp Inc. in July on "fears of a run" on deposits at Nat City "but rebounded as confidence returned."

"National City's peer-high capital ratios should be more than adequate for the company to work through its problem loan portfolios," Mr. Miller wrote.

And, notably, Nat City shares rebounded Tuesday, rising 29%, albeit to $1.75, or off 94% from their 52-week high of $27.21.

That Nat City's shares remain so depressed has investors questioning its ability to withstand a prolonged downturn — especially if credit markets truly freeze and the bailout plan fails altogether. Some skeptics note that Nat City executives have not shed light on when they expect to return to profitability.

"When you're trading below five bucks a share, history is not on your side in terms of recovery," David Allaire, portfolio manager for Mystic Asset Management Inc., said in an interview Tuesday. "If we don't get a bailout bill soon, I think the feds just might step in and put Nat City out of its misery, force a sale."

Citing concerns about its mortgage exposure and uncertain return to profitability, Moody's Investors Service said late Monday after Nat City's market value plunged that it would review the company for a possible credit rating downgrade, looking closely at its mortgage exposure.

And with a wave of consolidation building last month, Citi, JPMorgan Chase and Bank of America Corp. — which agreed to buy Merrill Lynch & Co. Inc. month — have established themselves as the clear big three in retail banking.

Against that backdrop, Wells Fargo & Co. may cast off its aversion to big deals so it could quickly recover lost ground and make itself a close fourth in line, rather than a distant one.

After closing the Wachovia deal this year, Citi would have about $600 billion of deposits. B of A has $700 billion. With the Wamu acquisition, JPMorgan Chase has more than $900 billion. Wells has about $310 billion, but buying Nat City would give it more than $400 billion and give it a big profile in Florida.

Wells declined to comment. Nat City said it is keenly focused on remaining independent.

"We can't control speculation; we can't control the markets," Ms. Adams said. But "we can continue to stress that we're strong, well capitalized, and positioned to manage through."

Eugene Ludwig, former comptroller of the currency who is now chief executive of Promontory Financial Group and is advising Nat City on its turnaround efforts, gave it a vote of confidence Tuesday.

In an e-mail to American Banker, Mr. Ludwig said Nat City's financials are fundamentally sound and it has the wherewithal to make it on its own.

"I know Nat City and its senior management well. They are people of energy and talent, devoted to the well-being of the institution and its customers," Mr. Ludwig said.

"Our team at Promontory has been working closely with Nat City for some time to reshape the business and strengthen risk-management practices to the new, higher standards demanded by the current environment. We anticipate that our work will continue for several months. Nat City continues to be a well-capitalized institution."

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