by Calculated Risk on 6/06/2008 12:16:00 AM

From the WSJ: National City Is Under U.S. Scrutiny

National City Corp.'s banking unit, which has been buffeted by rising bad loans, has recently entered into a "memorandum of understanding" with federal regulators, effectively putting the bank on probation.

The confidential agreement with the Office of the Comptroller of the Currency was entered into over the past month or so. ... Such MOUs are agreements between regulators and bank management. They are considered serious and are fairly rare ...

The bank division of National City had $153 billion of assets at the end of March, up from $132 billion one year earlier ...

It is possible that National City will resolve these issues, but I can't help but think of FDIC Chairman Sheila Bair's comments today: "There is also the possibility that future failures could include institutions of greater size than we have seen in the recent past."