Charlie Gasparino of Fox Business Network reported yesterday that the Obama Administration, Federal Reserve and Wall Street firms (like Goldman Sachs, Citigroup, etc.) are exploring a “face-saving” measure by splitting the presidentially beloved ShoreBank Corporation in two, with the community/green jobs lender surviving with the “good” assets while the FDIC and private investors absorb the toxic assets. Another reporter following the story told me that ShoreBank’s Friday deadline from the investors has been extended but he didn’t know how long. A spokeswoman from Goldman Sachs refused to comment on the issue.
Here’s the split-the-baby scenario explained by Gasparino:
This is asinine: as was reported last week by Bloomberg , ShoreBank’s Tier 1 capital has fallen from $43.5 million in December 2009 to $4.1 million at the end of June. It is almost entirely worthless and is only being saved – while other similar entities have failed – because of close ties to Obama administration officials like Valerie Jarrett. “Saving face” sounds about right after years of ShoreBank officials boasting they are responsible lenders (see page 25) who had no need for TARP funds.
The bottom line is even if this is a good/bad split, it’s still a bailout of the failed progressive agenda . So here’s an idea: let the progressives bail themselves out. If they are such firm believers in the social responsibility and environmental extremist agenda, then there are plenty of them out there – both wealthy individuals (think Soros, Heinz-Kerry, Ted Turner) and amazingly well-funded foundations – that are ideologically aligned with ShoreBank’s mission.
In fact, some of them are already shareholders in ShoreBank. First there’s the Ford Foundation , which worked with ShoreBank to help Nobel Peace Prize winner Muhammad Yunus establish Grameen Bank, to microlend in Bangladesh. The Ford Foundation’s mission includes social justice and sustainable development, just like ShoreBank. And it listed more than $10.7 billion in assets on its 2007 tax return, the most recent available on Guidestar. Sounds like the Number 1 candidate for ShoreBank to tap for help.
Next is the John D. and Catherine T. MacArthur Foundation, whose mission includes community development, reducing poverty, and social justice. The MacArthur Foundation reported $4.5 billion in assets on its 2008 tax return.
Another perfect resource and shareholder in ShoreBank is the leftist Joyce Foundation , which declared more than $612 million in assets to the IRS in 2008.
Finally, ShoreBank Corporation is a partner with Ecotrust in at least one of its sub-entities, ShoreBank Pacific. Ecotrust “is a conservation organization committed to strengthening communities and the environment from Alaska to California,” and reported nearly $17 million in assets on its 2008 tax return. And Ecotrust has its own well-funded backers, including the Seattle-based Islands Fund, which sends more than $600,000 annually to Ecotrust and had nearly $97 million in assets on hand at the end of 2008.
According to reports, ShoreBank has raised nearly $150 million from the Wall Street firms and can access $75 million in TARP funds, if it raises a bit more capital. Even if that’s another $100 million, $200 million, or whatever, the resources are at hand for ShoreBank to survive, if their partners in progressivism care enough to rescue them. No need for taxpayers or shareholders of other private institutions to be forced to save an institution that couldn’t survive because it was run by incompetent liberal ideologues.
Paul Chesser is an associate fellow for the National Legal and Policy Center.