Marathon Pundit: Giannoulias: A bad banker for the Senate

I know it makes good copy to call the election of a Class III US Senator in Illinois as a battle over Barack Obama's Senate Seat, but I prefer to call it the Democrats' defending Roland Burris' seat in Washington. And that defender is Chicago Democrat Alexi Giannoulias, who wants to serve on the Senate Banking Committee. Well, he knows how to use Broadway Bank's ATM, as David Freddoso reports in the Washington Examiner.

(The committee) is a lofty goal for someone whose family bank is likely to collapse within days, and in no small part because of a risky lending strategy that he admits he helped create.

Federal regulators will soon seize Chicago's Broadway Bank unless its owners -- the Giannoulias family -- raise $75 million in the next few days. (Since being elected treasurer, Alexi is a non-voting shareholder with 3.6 percent ownership in the bank.) The story behind the bank's downfall is best told by two numbers in the records Broadway filed with the Federal Deposit Insurance Corp.

The first number to consider: $147 million. That's the amount the Giannoulias family paid themselves out of Broadway's equity between 2001 and 2009, in the form of sometimes very large dividends. Their largest dividend -- $47.8 million, or 35 percent of the bank's year-end equity -- came in 2007, when Broadway was still profitable. In 2008, as its bad construction and commercial real estate loans were causing the bank to lose $13 million, the Giannouliases still took a $34.5 million dividend, worth 46 percent of the bank's remaining equity.

Broadway's $75 million loss last year did not stop them from cashing out a modest $4 million, either.