Nat City Is a Travesty

For pure laughs, go read the National City (NCC - commentary - Cramer's Take) conference call yesterday, the one where they destroyed what was remaining of their common shareholder base with the partial takeunder by Corsair, an unknown private-equity fund that surfaced to inject $7 billion to save the bank.

We have had some remarkably poorly run banks in this go-round of subprime, including Downey Savings (DSL - commentary - Cramer's Take) (takers anyone?) Wachovia (WB - commentary - Cramer's Take) and Washington Mutual (WM - commentary - Cramer's Take), as well as some nonbank fiascos like E*Trade (ETFC - commentary - Cramer's Take) and CIT (CIT - commentary - Cramer's Take).

But this Nat City takes the cake. They have to be the most stupid and least rigorous lender since the S&L crisis. They have $10 billion in home equity loans that have got to be among the worst ever issued. I swear, I bet that many of these are going to turn out to be out-and-out fraud by the borrowers. Miraculously, Nat City found an even more stupid soul, Merrill's (MER - commentary - Cramer's Take) Stan O'Neal, to sell its main originator of this junk to, something that brought O'Neal down and almost brought Merrill down. Some would say that the latter is still in question. I have no idea what would have happened to NCC if they hadn't sold it before the height of the fraud, the first quarter of 2007.

Nat City is not alone. The whole of Ohio seems consumed by crummy lenders: Huntintgon Bancshares (HBAN - commentary - Cramer's Take) and Fifth Third (FITB - commentary - Cramer's Take) being the most obvious. Both need infusions, I believe; maybe Corsair's got enough juice to give them some life.

But Nat City is by far the worst, with loans to every imaginable sort of bad borrower throughout Ohio and Florida. The sheer volume of specious lending is remarkable, coupled with the moronically aggressive buyback that the company did when the stock was much, much higher. That's the subject of a lot of derision on the call, by the way. That and repeatedly unanswered questions about all of the attempts to sell itself and how they apparently broke down.

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