An Ohio Congressman sounded a personal note Tuesday on the Treasury-fomented deal between Pittsburgh´s PNC Financial and Cleveland´s National City, offering a glimpse of a side-effect of the recapitalization plan that may still be to come.
Rep. Steven LaTourette, a Republican, accused Comptroller of the Currency John Dugan of favoring PNC, "a former client" from Mr. Dugan´s days at the law firm Covington and Burling, LLP at the expense of the "Civil War-era bank" from Rep. LaTourette´s home state. Mr. Dugan responded with a letter denying the allegation and pointing out that his firm had worked with both PNC and National City, but that he´d favored neither.
As more banks receive Treasury funds and use them to sweep up institutions weaker than themselves, the uglier side of consolidation-job losses and the disappearance of familiar institutions-will become a reality for a host of regions and their elected officials. Add the pace at which the recapitalization plan is moving, and more reactions like Rep. LaTourette´s are likely.
In response to Mr. Dugan's strongly worded denial, Rep. LaTourette told American Banker his accusation was motivated by concern for "the thousands of people in Northeast Ohio whose jobs are at risk and the many shareholders of National City Bank who wonder how their government could do something so harmful as part of a so-called rescue package." He added, "This taxpayer-financed deal was done in secret, and when billions of taxpayer dollars are used to force a Fortune 500 company to sell itself in a fire sale, it demands transparency. I will be requesting all records and communications from Treasury, PNC and National City related to this matter."
The Treasury has said it will not publicly
