PRESS RELEASE
`The Idiots in D.C. Were Warned':
Big Ohio Bank Near Failing for Lack of Homeowners and Bank Protection Act
April 2, 2008 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee (LPAC).
One of America's biggest regional banks, National City Bank based in Columbus, Ohio, is facing bankruptcy in the financial crash, by the negligence and incompetence of a Federal government which was warned six months ago that this bank needed Federal protection, and which has just thrown away $30 billion instead trying to guarantee the mortgage securities of a non-bank, Bear Stearns. By its own stupidity, National City earned itself massive losses in the mortgage bubble, and requires Federal bankruptcy protection, a thorough "asset" clean-out, and Federal regulation to operate as a sound institution.
Already on Sept. 26, 2007, an article on LPAC's site was titled, "National City: Why Chartered Banks Also Need Protection in Mortgage Blow-out," and presented National City as "an exemplary case" of banks needing protection under Lyndon LaRouche's Homeowners and Bank Protection Act (HBPA). The losses then from mortgages, mortgage securities, and derivatives were $750 million in 2007, $333 million in the fourth quarter alone. Again in January 2008, LPAC called for the HBPA to provide Federal protection for National City. Another $500 million in losses have been added in early 2008. The bank, 10th-largest based in the United States with 1,300 branches, has shed 3,000 of its 11,000 employees.
Since then, 80 cities and three state legislatures have passed demands for the HBPA—but Congress and the White House have blocked it with "stimulus" and "bail-out" acts instead.
"These idiots in Washington, D.C. were warned," LaRouche said today. "They were warned about this bank failing, simply for the lack of having enacted the Homeowners and Bank Protection Act. They learned nothing from reality. The HBPA is the only sane solution — and George Bush's insanity is no excuse."
Now, Cleveland press headlines are alternately reassuring nervous Ohioans about their bank accounts at National City, and warning them not to have more than the FDIC-insured $100,000 in those accounts. The radiating effects will also hit a dozen other midwestern states where National City has 1,300 branches. With its core capital "direly low," reduced by the losses right to the regulatory "minimum line" below which it cannot legally operate, National City has 19% troubled loans on its books. It is now trying to avoid failure by selling itself to the smaller Key Banking Corp. or to Wells Fargo, or to a Chinese or Japanese bank, or to the Dubai sovereign wealth fund.
