Last week the Chicago Tribune reported that Illinois Finance Authority chairman Bill Brandt threatened “a firestorm” in the Windy City if the Federal Reserve did not follow through with a bailout of South Side-based ShoreBank. This followed some reported pressure applied by the Obama Administration on companies like Goldman Sachs, Citigroup, GE Capital, Bank of America, and Chase, who were asked to kick in $20 million each to make politically-backed community lender appear eligible to receive TARP funds.
Turns out the preference for Chicago-type coercion goes right to the top (and the origins) of the troubled bank itself.
Mary Houghton is president and co-founder of ShoreBank Corporation, which is the parent to several other affiliated financial institutions and nonprofit organizations. Little is known about her except that she has a passion for microlending (which ShoreBank is heavily involved in) is said to have advised President Obama’s late mother… Read More ➡
Illinois Republican Rep. Judy Biggert on Wednesday inserted into the financial regulatory reform bill an amendment calling for an investigation of efforts to rescue ShoreBank. Meanwhile the White House issued denials that it pushed for a bailout of the politically-favored community lender. The Chicago Sun-Times reported yesterday:
As Chicago’s ShoreBank struggles to survive, the Obama White House issued a strong statement Wednesday denying that it is interfering in any way with federal regulators or influencing financial institutions willing to pump money into the bank.
“White House officials have not met with ShoreBank regarding support measures for their bank, nor has the White House ‘made asks’ of financial assistance to other financial institutions for ShoreBank,” said Amy Brundage, a White House spokeswoman.
Keeping with the policy to “put nothing in writing, ever,” and the historical precedent the administration made in a non-offering of a non-job to Pennsylvania Democratic Senatorial candidate Joe … Read More ➡
According to a story over the weekend from the Chicago Tribune, the $135 million that the Obama Administration reportedly coerced from TARP recipients like Goldman Sachs and Citigroup may not be enough to save ShoreBank, the politically connected “community” lender whose big bank bailout was supposed to make it eligible for its own TARP funds. From the Tribune:
The bailout of Chicago-based ShoreBank has hit a serious snag as the Federal Reserve and Treasury drag their feet on whether to provide funding to the ailing South Side lender, sources close to the situation say….
The Treasury is deferring to the Federal Reserve. One source said some at the Fed want ShoreBank to raise more private dollars before it gets government money.
The source said the private investors are unlikely to kick in any more money. Many of the big banks received federal bailout money and have since
… Read More ➡
Congressman Spencer Bachus of Alabama must feel like he’s experiencing déjà vu all over again.
The Ranking Republican on the Financial Services Committee last month asked the Obama Administration to explain its role in the bailout of Chicago-based ShoreBank, a lending institution favored by the community organizing and green job creating crowds. Hundreds of similar-sized others were allowed to fail, but several “too big to fail” banks (who survived thanks to TARP money) were reportedly pressured into a joint effort to rescue ShoreBank. Bachus sent the president a letter, then issued a press release:
Bachus and Oversight and Investigations Subcommittee Ranking Member Judy Biggert demanded to know who in the Administration was involved in orchestrating capital contributions totaling approximately $150 million by some of the nation’s largest banks, including Goldman Sachs and Citigroup (also GE Capital, JP Morgan, and others), so that ShoreBank could qualify for $75 million in
… Read More ➡