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Giannoulias spot on Broadway Bank failure and Kirk. Kirk replies

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After the Giannoulias spot was released, the Kirk campaign on Tuesday sent out a reply:

below, from the Kirk campaign...

The Alexi Giannoulias Spin Cycle

From loans to criminals to the collapse of his bank, Alexi has a history of spinning inconvenient truths

Alexi Giannoulias is employing a serious spin cycle as he attempts to elicit sympathy for his reckless decisions that brought down his family bank and cost the FDIC $394 million. As it has often been the case throughout his career, Mr. Giannoulias resorts to pointing fingers when he finds himself in an inconvenient situation.

Bright Start: When the Bright Start college fund lost $150 million of Illinois families' college savings, Alexi loudly blamed the fund manager, Oppenheimer Funds. Alexi neglected to mention that he chose Oppenheimer to manage Bright Start, and that he was well aware that certain Bright Start funds were having problems in April of 2008, six months before he eventually pulled out of the troubled funds. [1]

Loans to Criminals: When Alexi's loans to convicted bookie and pimp Michael "Jaws" Giorango first came to light during his 2006 Illinois Treasurer campaign, Giannoulias called him "a very nice person", and disputed Giorango's criminal record saying "I don't know what the charges are that makes him this huge crime figure."[2] When asked in an interview whether it was acceptable for the State Treasurer to invest money with crime figures, Giannoulias replied that the Treasurer must get "the best rate of return."[3]

When those excuses didn't fly, Giannoulias claimed he had no role in the loans, even though he was Chief Loan Officer, saying "If it was up to me, I probably would have recommended against these loans."[4]

When asked for more details in the Senate campaign about how Giorango came to get loans at Broadway Bank, Giannoulias hid behind his deceased father, saying "It's tough to ask my father questions."[5]

Broadway's Collapse: Alexi said nobody could have foreseen the problems that led to Broadway Bank's collapse. But Broadway Bank had 12 times the national average of risky "hot money" brokered deposits.[6] The dangers associated with brokered deposits have been well-known since the Savings and Loan crisis, and the New York Times called them "one of the primary factors in the accelerating wave of failures among small and regional banks nationwide."[7]

Now Alexi is claiming it is Congressman Kirk's fault.

Alexi Giannoulias has a big problem. Last week, federal regulators closed his family's money-losing Broadway Bank, where he acquired the financial expertise he touted in running for state treasurer in 2006. So where does he place the blame? On Mark Kirk, his opponent in the race for the U.S. Senate.

... As it is, Broadway's losses are far bigger than most other failed banks, amounting to a third of its assets. "The real question is why it wasn't closed a long time ago," says Washington, D.C.-area banking consultant Bert Ely. "It was a badly run bank."

A badly run bank. Someone is to blame for that, and it isn't Mark Kirk. (Chicago Tribune, 4/27/10)

There are serious questions about Broadway Bank and how it got to this point that Alexi will have to answer as his campaign moves forward. As we enter Alexi's Spin Cycle, how will Alexi spin this?

Did Alexi Giannoulias pull his campaign funds out of Broadway before it failed?

The FDIC only insures up to $250,000. Given the deadline imposed by the FDIC, did Alexi change banks to protect his campaign cash, or did he leave it in Broadway because he had advance knowledge that the bank would be acquired?

1 Comment

FYI...

FDIC only insures up to $250k on interest bearing accounts, so if accounts are not interest bearing, they are secured 100% so I dont think Alexi's campaign account had a problem.

Also, I would love for the FDIC or Mark Kirk, or even Bert Ely to prove where the fund will lose $400M on Broadway? The State of Illinois stole this bank from the family and gave it to MB Financial who instantly gained $30M on nothing. FDIC could have given more time NOT to lose $400M and let the Bank work through their problems, but they wanted to put the Media Circus to Bed. MB Financial have not intention to sell OREO or Non Accrual Assets for the highest and best price, which was Broadway Bank's ultimate goal, since the Government Protects them 80/20 with the Loss Share Agreement.

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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 April 27, 2010 2:01 PM.

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