Nov. 16--The notion of combining regional-banking giants National City Corp. and PNC Financial Services Group of Pittsburgh isn't new. Discussions along those lines have taken place as long ago as the 1980s.

"We used to talk about merging," said Julien McCall, chairman of National City from 1979 to 1986. "We liked each other and were compatible, but we couldn't figure out who would run it."

The Treasury Department recently made the "who's in charge" decision moot when it denied National City's request to be included in the $700 billion rescue plan. Instead, PNC received $7.7 billion in federal funds and marching orders to use it to buy struggling National City, which it did for $5.58 billion, or $2.23 a share.

The pending acquisition would create the nation's fifth-largest bank and end a tumultuous period in which the Cleveland-based bank morphed from a regional powerhouse built on conservative stewardship to one that became increasingly comfortable with higher levels of risk.

In the end, National City was a textbook example of how the subprime-mortgage mess and the accompanying drop in home values brought down seemingly indestructible companies and led the country into recession.

National City shareholders lost billions as the company's stock plummeted from $38 in early 2007 to less than $2 at one point, and many Ohio residents saw their investment and retirement accounts drop dramatically.

Howard Klein was one of the stockholders who watched his National City investment become virtually worthless. "I got hit pretty good, but I have some friends with even bigger stakes. They've really been hurt by this," said the northern Ohio resident.

David Daberko, who retired as chief executive in July 2007 and was succeeded by Peter Raskind, did a little better and earned about $21.3 million in compensation from 2005 to 2007.

National City's story is one that will be told long after its name fades from the headlines.

"This is a fantastic case study we'll be teaching for a long time," said Andrew Karolyi, a professor at Ohio State University's Fisher College of Business.

The lesson, he said, is that financial institutions are intrinsically linked to one another and the overall economy. A serious break in the chain -- in this case, the decline in housing prices -- can lead to "a systemwide failure to the real economy, to unemployment, to the gross national product."

The chapter on National City will describe a bank that jumped into the lucrative subprime market with both feet, scooping up companies that originated those risky loans and also offering such loans on its own to its core market in the Midwest and then to customers all over the country.

"They were one of the most aggressive subprime lenders," said Matt McCormick, an analyst with Cincinnati investment adviser Bahl & Gaynor. "It was great when the market was great, but they paid the price when it wasn't."

McCall said he saw it all coming and tried to warn National City executives and board members, but to no avail. "It's sad for the people involved," he said, "especially the stockholders, who absolutely got clobbered."

From conservative to aggressive

The bank traces its roots to 1845 and City Bank of Cleveland, which 20 years later became National City Bank of Cleveland.

Slow, steady growth and a conservative Midwestern philosophy were the bank's hallmarks. It was one of the few in Cleveland to survive the Great Depression, and it absorbed several other banks, tripling its size.

McCall was named president in 1971, CEO in 1978 and chairman a year later.