Kaptur calls on Bush to stop takeovers of area banks
U.S. Representative Marcy Kaptur (OH-9) called upon the Bush Administration to stop Wall Street takeovers of local banks and mega-mergers such as Pittsburgh-based PNC Financial Services’ acquisition of National City Corporation.
Kaptur, a strong opponent of the administration’s Wall Street bailout, warned at the time that the legislation would be “ineffective,” “wrongheaded,” and unable to resolve the financial credit instability in the markets.
PNC Financial Services Group said it would pay approximately $5.6 billion for the Cleveland-based National City, which operates approximately 20 branches in the Toledo area. The acquisition will make PNC the fifth-largest bank in America as measured by deposits and give PNC the largest deposit share position in the state of Ohio.
Kaptur, however, urged the administration to fully engage the Federal Deposit Insurance Corporation’s net worth certificate program as a critical step to settle the nation’s banking system.
The United States “does not need a more concentrated banking system,” Kaptur said. “It needs an effective answer to interbank and market unsteadiness. That answer lies in empowering our local banks to do business as normal by enhancing their creditworthiness in the regions in which they conduct business, not eating them alive.
“In addition, the administration needs to immediately stop the continuing mortgage foreclosure hemorrhage—by accelerating mortgage workouts in their regions. The epicenter of the banks' problems result from the shrinking value of real estate loans on their balance sheets due to declining property values.
“In concert with this effort, the Securities and Exchange Commission has an obligation to mark mortgage assets to true market value, not an arbitrary index.
“Unless these steps are taken, the economic situation will worsen. A stimulus package being contemplated by Congress cannot hope to offset the damage being done daily to our banking system by the inept, uneven, and ineffective approach that this administration has undertaken.
“Washington Mutual, which was a good bank, never should have disappeared as a bank. Now, here in Ohio, National City, another good bank headquartered in our own state, has been gobbled up. This is wrongheaded policy that is hurting our economy more each day. It reminds me of the book ‘Barbarians at the Gate.’ Absent the robust use of FDIC's net worth certificate program, coupled with accelerating mortgage workouts, and invoking SEC's accounting powers, the heedless and needless mega-concentration of our financial system will continue.
“I have been asking myself if the Bush Administration is simply inept in dealing with this situation, as it was with Katrina. When a real national emergency required dispatch, it fouled. If it is not ineptitude, then what we are witnessing is a hostile takeover and plundering by Wall Street's most irresponsible institutions of our sound local and state banks, and with it, the acquired wealth of the American people, six weeks before elections and three months before a new administration is sworn in.
“It is time for the American people to demand the Bush Administration and their Wall Street compatriots give us back our local banks, our stability, and our futures by doing what any sensible administration would do: (1) engage FDIC's net worth certificate program NOW; (2) order SEC to mark real estate assets to true value, not an arbitrary index; (3) order mortgage workouts now through the FDIC, and divert the $350 billion remaining at Treasury to this purpose, rather than using our tax money to buy bad loans which is a bad idea by any measure. Treasury has NO experience in housing real estate anyway and their regrettable experience in handling our national debt should make us all shudder.”