Rep. Steven C. LaTourette (R-Ohio) and Comptroller of the Currency John Dugan have engaged in a heated exchange of opinion regarding the recent acquisition of Cleveland’s National City Corporation by Pittsburgh-based PNC Corporation.

In a letter to Treasury Secretary Henry Paulson, LaTourette asserted that PNC’s benefits from the recent change in the tax treatment of acquired assets would amount to $5.5 billion, which the Congressman asserted would almost equal National City’s purchase price.

“Congress was told the bailout was to purchase toxic mortgage assets, and then Paulson switched gears and said Treasury had to take an equity stake in banks to ease the credit crisis and free up loans. It turns out that banks that take money from the Feds don’t have to issue more loans, and instead can use that money for bank acquisitions,” LaTourette said. “The decision to relax this tax rule is just icing on the cake for banks.”

LaTourette also objects to the fact that PNC will get $7.7 billion in “bailout money,” as he calls it, “far more than the three percent it is entitled to under the Troubled Assets Relief Program (TARP) rules. Published reports indicate that PNC was able to get so much extra funding from the government because regulators encouraged it to apply for National City’s share.”

LaTourette also charged that decisions regarding the acquisition were influenced by PNC having been a client of Dugan’s before the Comptroller of the Currency left the private practice of law for his current position — a charge Dugan dismissed as “absolutely baseless.”