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Illinois GOP tries to foil Alexi Giannoulias phone briefing with demand: "Put Alexi on the phone"

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Below, from Illinois GOP.....


Put Alexi on the Phone!

"Voters want to know about his role in his family's struggling Broadway Bank, and Giannoulias promised he'd provide those details after the Feb. 2 primary election. "If I'm fortunate enough to make it out of the primary, we can have that conversation," he said. His plan now seems to be to stonewall until November." - Chicago Tribune Editorial, February 12, 2010

CHICAGO - Today marks the 20th day of Alexi Giannoulias' silence since promising reporters he would answer questions surrounding his role in the near-collapse of his family's Broadway Bank.

On Sunday, the Chicago Tribune called on Giannoulias to finally come clean. Today, at 1:30 PM, senior staff for Alexi Giannoulias (including a former senior advisor to Rod Blagojevich) will hold a telephone press conference to test the waters with reporters and see if they can change the subject. After 20 days, it's time to put Alexi on the phone - not his staff.

"Alexi Giannoulias should stop hiding and start answering questions about Broadway Bank," Illinois Republican Party Chairman Pat Brady said. "The Chicago Tribune is right, Alexi. It's time for that talk."

Last month, the New York Times reported extensively on Giannoulias' "hot money" investments, which may have directly contributed to last month's FDIC consent decree with the Giannoulias family bank. In its editorial, the Tribune suggested Giannoulias sit before their editorial board for a 90-minute session to answer the questions he has dodged since January 28th.

Key questions for reporters today:

1) Will Alexi hold a press conference to answer direct questions about his role at Broadway Bank?

2) Will Alexi agree to meet with the Chicago Tribune editorial board to address its concerns?

3) Will Alexi agree to meet with other editorial boards around the state?

4) Has the Giannoulias family met the FDIC consent decree's 10-day requirement to immediately recapitalize $19 million - and did Alexi personally contribute to that recapitalization?

5) Why is Pete Giangreco, a former political consultant to disgraced ex-Governor Rod Blagojevich, hosting this conference call?

From the Tribune's weekend editorial:

The picture that comes to mind now is more "Look Ma, no hands!" In the four years Giannoulias worked for the bank, it came to rely heavily on relatively risky construction and development loans funded by volatile brokered deposits. It was an aggressive, high-growth strategy, and it was enormously successful -- until the real estate market tanked, sending the banking industry into a tailspin.

Instead of building capital to cover its high-risk lending, Broadway paid out bigger and bigger dividends -- including more than $70 million in 2007 and 2008, just when things were getting really ugly. That's one thing that has piqued voters' curiosity. The Giannoulias family holds all the stock. Federal regulators have suggested that one way for the bank to raise the needed capital would be for the shareholders to make a direct cash contribution. In other words, put it back. If they can't raise the capital, the bank could fail, leaving the federal government on the hook.

As the New York Times reported, Alexi may have played a direct role in creating the current crisis at Broadway Bank:

Construction-related lending jumped to more than triple the bank's required regulatory capital during this period, and the loans started to go bad. By the time Mr. Giannoulias departed, Broadway was left with nearly $14 million in real estate on its books, more than 10 times the level when he arrived. Foreclosures take time, though -- often about 18 months. And within two years of Mr. Giannoulias's departure, the bank was left holding $38 million in real estate.

The move into real estate coincided with a headlong push into brokered deposits. This is quintessential hot money -- large amounts that jump from bank to bank, each bank offering the lure of high interest , which the banks then must fund by making ever-riskier loans.

During Mr. Giannoulias's time at the bank, brokered deposits catapulted fourfold, to $640 million. The typical bank at this point was growing brokered deposits at about 9 percent a year. Mr. Giannoulias's bank was increasing its load by as much as 48 percent in a single year. Broadway Bank's brokered deposits reached 80 percent of total deposits in 2006.

No one knows for certain how big a role Mr. Giannoulias played in these decisions. As Broadway's top lending officer, he must have influenced the move into construction lending. As a connected family member, he was probably present during discussions of the hot-money play. Certainly, he took part in the family's decision to take out some $70 million in dividends from the bank in 2007 and 2008, even as it careened toward a consent decree with the F.D.I.C.

Mr. Giannoulias told reporters that a time would come when he could answer questions about what happened at his family's bank. Here is hoping there is plenty of time, because questions keep mounting faster than the troubles at Broadway Bank.

The following citations are provided as background on Pete Giangreco's role as political consultant for disgraced ex-Governor Rod Blagojevich:

"They were in different worlds personally and politically," said Peter Giangreco, a political consultant on Blagojevich's 1996 congressional campaign and his two gubernatorial races. "They only dealt with each other because they occupied the same political geography." (Associated Press, December 21, 2008, "Senate-for-sale case threatens new chief of staff")

Blagojevich consultant Pete Giangreco said that agenda resonated with voters. "It was a very clear choice for voters about doing things for people that will move Illinois forward or taking a step back," he said. (Daily Herald, November 8, 2006, "Blagojevich rolls to win Despite talk of scandal governor bests Topinka")

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1 Comment

Foil his call seems to be a bit strong. Asking reporters to ask questions should be fair game.

Now, had the IL GOP called in and starting asking questions, that definitely would be below the belt.

It's an open request; it's a transparent request... Really not even worth noting... Unless of course you are looking for an excuse not to ask those questions...

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Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

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This page contains a single entry by Lynn Sweet published on February 17, 2010 1:34 PM.

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