Government playing favorites on which banks continue operating and which don't?

The WSJ has this:

National City got the cold shoulder. The government threw billions of dollars at PNC Financial Services Group Inc. so it would buy the 163-year-old bank.

AmTrust, however, got a second chance. In late February, regulators agreed to a turnaround plan proposed by AmTrust, according to people familiar with the matter, even though its capital was much thinner than its Cleveland rival's was last fall.

The starkly different fates of the neighboring banks show how the U.S. government's approach to dealing with the industry's worst crisis in a generation has shifted. The decision to allow only one of the two banks to survive has fueled criticism that regulators are picking winners and losers, without disclosing their criteria for making the calls. That, in turn, has shaken the confidence of bankers and private investors trying to decide whether to wade into the troubled sector. . . . .



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