Takeover by PNC Heralds Fall of a Cleveland Institution

The result has been a rush of foreclosures. The number of foreclosure sales in the five-square-mile neighborhood swelled from 114 in 2001 to 840 last year. In the first six months of this year, 316 Slavic Village properties have been through foreclosure, according to figures compiled by the development corporation.

The story has been repeated to varying degrees throughout Cleveland, and the result has been the virtual collapse of the city's housing market. Livable homes can be had for as little as $6,000 or $7,000, while many others have tumbled into complete disrepair, leaving city officials in a desperate battle against the resultant blight. In Slavic Village alone, more than 50 arson fires have been set this year, while many of the vacant homes are ravaged by scavengers, looking to cash in on the copper wiring and plumbing and aluminum siding that they sell as scrap metal. It is a stunning decline that is sure to shrink the city's property tax base for years to come.

Jackson, the mayor, said the collapse is rippling across the region, with declining property values hurting even residents of more affluent neighborhoods. "As people lose home equity, they are having problems upgrading cars and sending their children to college," he said. "All of these things are off the table for some people. When that happens, the demand for goods and services are negatively impacted."

Jackson, who said the city has avoided deficits only by making across-the-board spending cuts in the past two years, said he is looking to Washington for a stimulus package for cities. Such a plan is in the earliest discussion stages in Congress. "There has to be an infusion of federal dollars," he said.

As the city struggled, National City went into a furious scramble for life, seeking to free itself from its bad loans.

The bank sold its subprime unit, First Franklin, in 2006, though it has held on to some of the most questionable loans. Raskind took the top job in 2007 and has attempted to steer the teetering company to safer territory and return to the kind of community-based business that was once its hallmark. In April, the bank received a $7 billion private-equity investment, which helped build capital reserves.

But it was too late. Soon, the bank founded in Cleveland in 1845 is likely to disappear into PNC.

"Initially, you're going to be hurt," Mahnic said. "It takes you a while to heal. Cleveland will overcome this, and Cleveland will adjust, but it's going to take some time."

Staff writers Ylan Q. Mui and Binyamin Appelbaum contributed to this report.