On Feb. 26, 2010, Bloomberg.com reports the following: "Fridays are getting tense in the Chicago campaign office of Alexi Giannoulias, the Democrat seeking the U.S. Senate seat once held by President Barack Obama. That's the day regulators announce which troubled banks they'll close.
Broadway Bank in Chicago, owned by Giannoulias's family, must attract at least $75 million in capital by late April to meet terms of a consent order with the Federal Deposit Insurance Corp. prompted by losses on commercial real-estate loans".
After reading this article, I was amazed by the actions of the Giannoulias family. In backward chronological order:
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February 2, 2010, Alexi Giannoulias won the democratic primary to run for U.S. Senate.
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One week prior (late January 2010) the FDIC in joint efforts with the Illinois Department of Financial and Professional Regulation issued a consent order. This order requires the family owned bank to raise capital because of significant loan problems or risk having the bank shut down by the FDIC. The estimate is about $75 million to recapitalize the bank.
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That order is most likely driven by financial data as of 12/31/2009 the bank is required to submit to the FDIC.
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In November 2009, the Giannoulias family paid out dividends to family members to the sum of $70 million. Simply appalling. They claim it was to cover income taxes after their father's death. It would seem highly appropriate given the circumstance that they fully disclose those financial details. And, I'm sure the IRS could have worked out term payments over years.
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Now, as a banker, any senior level banker or owner would know in November 2009 the bank had serious issues and the institution could not afford to pay dividends of $70 million and it would deplete the bank's capital, which is ironically very close to the $75 million needed to recapitalize the bank.
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Bloomberg reports: Alexi Giannoulias has a 3.5% ownership of the bank
What's very fascinating about this issue is two fold: First, is this situation one of fraudulent activity? I wonder if they studied under Madoff? Now, there might not be anything actually illegal in their actions, even though it's highly unmoral. It seems like the family is taking what money they can and passing the issue onto the FDIC and tax payers through the eventual closing of the bank.
Secondly, fruit does not fall far from the tree, and why would any citizen of Illinois want a member of the Giannoulias family as their politician?
Haven't we all had enough of these types in government? Why isn't his buddy, President Obama asking him to step out of the race, it's embarrassing to say the least. Please, oh please, Illinois citizens vote for his competitor, "Mark Kirk".
Hope all is well.
