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National City Bank Stock Still Fluctuating

If there's concern about the safety of deposits in troubled National City Bank, you wouldn't have known it at the branch at Playhouse Square. Only one customer came in to do business in twenty minutes.

Carol Sopko was making a stop before lunch. She's a National City Bank depositor and shareholder. She was surprised by the level of concern she heard in the news.

Sopko: "I don't understand that because it's federally insured. How many people have more than a hundred thousand dollars in any one bank account -- certainly not the normal person, so I don't know why people are upset."

National City is the country's 10th largest bank. Its stock dipped below $3 a share Monday, the lowest level in decades. Other banks involved in the sub-prime loan crisis also saw losses.

William Monic is a finance professor at Case Western Reserve University, and also a former National City Bank employee. He says National City got caught up in fears about the viability of Fannie Mae and Freddie Mac.

Monic: "The rumor in the market was that the government wasn't going to be willing to take Freddie Mac and Fannie Mae into conservancy, where the government would backstop any loss."

Because the two agencies buy about half of the home mortgages made by local banks, Monic said many local mortgages would disappear -- or become too expensive.

Monic: "You'd be lucky to get a mortgage for 20 percent down, you might have to go 30 or 35 percent."

The U.S. Treasury has announced a plan to lend Freddie and Fannie money if needed -- but so far it's only a plan.

As things stand today, Monic thinks that bailout will come. In fact, he's so sure that his own deposit there exceeds the FDIC limit.

At the close of the market, National City stock was down four-and -a-half percent.

Kymberli Hagelberg, 90.3.

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