The sale of National City, pt.2

I'm still looking for my last dividend check--the one for thirty two cents. The top three executives will get golden parachutes with a combined value of $40 million following the sale (adjusting I assume for the current value of the stock which must not be too terrific); Peter Raskind, Daniel J. Frate, John L. Garney.

Ohio's progressives, socialists and marxists will scream about greed and the failure of capitalism, but I won't. I owned a few shares for about 30 years and did nothing except open the envelope four times a year, endorse the dividend check, and take it to the bank. It was never huge--probably not more than $30-$50 a year, but it was more than the cost of gasoline to drive to the bank, which the most recent one wasn't.

Meanwhile, they were being paid big bucks to figure out how to manage demands that they live up to the crazy expectations of the law and regulations to loan easy money to people who may not be able to pay it back. A law, the Community Reinvestment Act, which started small and quietly during the 1970s, with good intentions. People whose homes may never appreciate, but may depreciate, to fund builders and city services which also jumped into "the American dream" bubble. Easy money--that's what government tampering with the banks and credit did for us. Even churches got into the act, although I don't think they did the political advocacy of the left wing, ACORN type organizations. They too set up corporations, hired people, fixed up homes, "stabilizing neighborhoods," "strengthening community," to help the poor, everyone from Mennonites, to Catholics to Lutherans. But they did it with government money so they'd qualify for loans.

"The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being." "The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities," City Journal, Winter 2000

So yes, they were greedy, but when you try to strangle a business, any business, with regulations while also demanding that it perform as a sugar daddy social worker for the poor and low income, you just might find them looking for loop holes to outsmart those guys who float in and out of the beltway, who lobby, and populate endless think tanks.

It's Congress that I'd like to drop from a plane without a parachute, golden or otherwise. It was a stupid affirmative action scheme even back during the Clinton years, but there was time to remedy it. (Bruce Marks , primary culprit--story from 2004) Bush couldn't pull his people together when he had a Republican Congress, and the Democrat Congress blocked any effort, even those late ones, to fix the problem. If Gore had won in 2000, we'd be in exactly the same spot. Had you thought of that? We'd probably gone to war since the whole WMD meme started in the 90s with the Democrats, but even if we hadn't, the economic system still would have failed because the same policies chasing the same easy credit would have been there.

Now we're in a recession, and about to do the Hoover-Roosevelt two step all over again, only this time it will be Bush-Obama. Let's hope it won't take a decade of more tampering and 25% unemployment this time.

The sale of National City

National City Corp., Ohio's biggest bank, acquired Buckeye Federal Savings and Loan of Columbus in 1991 which had a small branch in the Tremont Shopping Center close to our home. This week it agreed to be bought by PNC Financial Services Group for more than $5 billion. I had opened a savings account at Buckeye Federal because it was convenient (within walking distance). When depositors were allowed to buy stock, I did--maybe 10 shares. I think until it was bought by National City, I used my dividends to buy more stock. This was my first adventure into investing, and I know exactly where the money came from and the sad, sad story of where it has gone (subprime mortgages). My last dividend check was thirty-two cents, less than the stamp to mail it.

When my grandmother's estate was finally settled (it took years--apparently the fine state of Illinois thought my grandmother had given her three children her farms in Iowa and Illinois as a death-tax dodge). My mother, a very mild mannered woman with a wry sense of humor, said this was clearly ridiculous, noting that Grandmother a somewhat stubborn and strong willed woman had no intention of dying--ever. Grandma died in 1963 at 87, and I don't recall exactly when everything was settled, but it went on a long time. Sometime in the early to mid-1970s my mother gave me $5,000 from Grandma's estate. This was more money than I'd ever seen, so I took it to the Buckeye Federal branch, and in turn, opened college accounts for my two young children using their SS# (don't ever do that), and put the balance in my account.

I wanted to be very careful with this money because I knew the story of its journey. My grandmother's father was born in 1828 in Adams County, Pennsylvania. He was a hard worker, ambitious, and when news of the Gold Rush in California got to southeastern Pennsylvania, it looked like a lot more fun and money than driving a team to Baltimore and back for his father. So he and a friend were on their way. We have no record of what happened, but we assume the friend died during the trip, and Grandfather David settled in Rockford, Illinois where he worked as a carpenter making furniture and household things. He saved his money, and eventually bought acreage in Lee County very cheap because it was marsh land that needed to be tiled. He returned to Pennsylvania, found a bride, and they set up house near Ashton, Illinois.

Wedding photos, 1855
Fast forward through the Civil War, coming of the railroad and boom and bust years of the 19th century. When he died in 1912 his estate was worth about $250,000, which was a lot of money in those days--probably millions in today's dollars. My grandmother was the youngest of four, with a college education, husband and 2 young sons. The other three siblings had all died rather tragically as adults--Willy, diphtheria, Martha, child birth and Ira, blood poisoning. So she inherited a third of his estate along with her nieces and nephews, children of her deceased siblings. She and grandpa, who didn't like farming and wanted to be a business man, settled down on the farm--although neither were suited or prepared for this life. Fast forward through the ups and downs of WWI, the Great Depression, WWII, and old age, with grandma doing all she could to hang on to the land.

So that's how the money came down to me to deposit in Buckeye Federal, which was absorbed into National City (I'm guessing because of the S&L scandal of the 80s, but haven't really documented that), which this week met its own end. National City was most likely brought down by bad investments in subprime mortgages.

And it all started about 160 years ago with a young man heading for California on an adventure.

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Note: As I re-read this a month later, I see I used both "City National" and "National City", probably because when you leave a saved post in blogger to go out to the internet, it sometimes returns you to a previous unsaved post, and thus, you think a correction you made is there, and it isn't, you then resave, losing the first save. Get it? Well, since these mistakes never get erased, if you got here or didn't get here because of a mistake, I apologize. I really did try to correct them early on.