Marathon Pundit: Feds get tough with Giannoulias' Broadway Bank

Wednesday, January 27, 2010

Feds get tough with Giannoulias' Broadway Bank

The only good news for Alexi Giannoulias regarding the FDIC's clampdown on Broadway Bank is that with the primary election just six days away, the impact of this Crain's Chicago Business report could be diminished because there is a plethora of political news for the public to digest.

If Giannoulis wins the Democratic nomination to the US Senate for Illinois, which I think he will, he's damaged goods in the fall.

Broadway Bank, the troubled Chicago lender owned by the family of Illinois Treasurer and U.S. Senate candidate Alexi Giannoulias, has entered into a consent order with banking regulators requiring it to raise tens of millions in capital, stop paying dividends to the family without regulatory approval, and hire an outside party to evaluate the bank’s senior management.

The Jan. 26 consent order with the Federal Deposit Insurance Corp. and the Illinois Division of Banking comes less than a week before Mr. Giannoulias — Broadway's chief lender and then vice-president from 2002 to 2006 — must face voters in the Democratic primary for the Senate seat previously held by President Barack Obama.

He's faced criticism, principally from former city Inspector General David Hoffman, who’s running against him, for his past role at the bank and the $70 million in dividends the family took out of the bank in 2007 and 2008 as the real estate crisis was becoming apparent.

In a letter Wednesday to employees, Broadway Chief Financial Officer Kaushik Pancholi wrote, "For thirty years, we have been a proud part of this community and this city. Traditionally, we have been one of the most profitable banks in Illinois, and we hope to return to those days. . . .We have seen difficult times before, and we have always found a way forward."