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The latest in ShoreBanks struggle to survive. White House denies Biggert interference charge

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WASHINGTON -- 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.

"Questions that come to the White House from institutions regarding the [Community Development Financial Institutions] program are referred to the Treasury Department or to their bank regulator who are the ones that decide these matters," she said.

The statement came as Rep. Judy Biggert (R-Ill.), a member of the House-Senate panel negotiating financial regulatory reform legislation, had an amendment accepted Wednesday targeting ShoreBank, calling on the inspector general at the Federal Deposit Insurance Corp. "to probe the use of inappropriate political pressure by executive branch officials to arrange the rescue of politically favored banking institutions."

However, the final language of the bill is still under discussion, and the section of the measure to which Biggert's amendment is attached may not end up as part of the final compromise.

Rep. Luis Gutierrez (D-Ill.), another member of the negotiating panel, strongly objected to Biggert's amendment, which was adopted in a voice vote.

"The amendment was so broad it would open the door for politically motivated investigations into almost any financial transaction," Gutierrez said.

"It wouldn't keep politics out of the process; it would potentially inject partisan politics into investigating the most basic bank activities," he said.

ShoreBank Executive Vice President Fran Grossman said: "We have never spoken to anyone in the White House about this application process and would not compromise the White House by doing so."

ShoreBank is awaiting word on whether federal regulators and the Treasury Department will OK $75 million in help from the federal Troubled Asset Relief Program.

A group of Wall Street financial institutions -- JPMorgan Chase, Goldman Sachs, Citigroup and GE Capital -- pledged more than $150 million as part of the deal.
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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 June 24, 2010 10:19 AM.

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