Political Pressure Saved ShoreBank Management

National Legal & Policy Center ^ | August 24, 2010 | Paul Chesser

[jazusamo]

 

Among other things, it looks like the Chicago lobbying to save ShoreBank paid off. Earlier this month I discovered a letter sent by Windy City power player and big Democrat donor Lester McKeever, Jr., to Treasury Secretary Timothy Geithner, which urged his intervention. "It is my hope," McKeever wrote, "and one shared by others who care deeply about its most vulnerable communities, that the ShoreBank recapitalization plan with investment coming from the U.S. Treasury will enable it to continue servicing its customers and fulfilling its mission."

In a post today on ShoreBank's blog, online channel manager (whatever that is) Sarah Ewing welcomes customers to the renamed institution, Urban Partnership Bank, that survived thanks to the FDIC lopping off ShoreBank's bad assets. Reading like a press release, Ewing explains how UPB will continue the same services that ShoreBank used to deliver, under the leadership of chairman David Vitale, who replaced previous management in March. Her post closes with a quote from McKeever:

“We have complete confidence in the leadership and ability of David Vitale and his team to make Urban Partnership Bank an effective resource for growing small businesses, creating new jobs, strengthening nonprofits and renovating abandoned and neglected real estate that will help restore the economic vitality of our communities.”

Also pressing Geithner heavily before ShoreBank's seizure were four Democratic congressmen who represent Chicago-area districts: Rep. Jan Schakowsky, Rep. Jesse Jackson Jr., Rep. Danny Davis, and Rep. Bobby Rush. On Friday Schakowsky, who put forth an extraordinary effort on behalf of a bank that wasn't even in her district, expressed her relief that the ShoreBank "mission" would continue:

I congratulate Urban Partnership Bank’s Chairman, David Vitale, for continuing the legacy of ShoreBank and applying to become a Community Development Financial Institution....ShoreBank has been the iconic CDFI. It was established in 1973 in Chicago and throughout its years of service became the model for such banks around the country. I am very pleased that Urban Partnership Bank has found a way to give ShoreBank’s essential mission a second chance.

And then there are the obvious Obama Chicago ties....

As I mentioned yesterday, Ewing confirmed also -- citing Vitale -- that UPB would continue to make sure it adheres to multiple "bottom lines:"

Vitale announced that Urban Partnership Bank will apply to become a Community Development Financial Institution (CDFI), reflecting its mission to serve low and moderate income and minority communities. The new bank will also continue to support energy efficiency and environmentally-friendly development.

By the way, when I posted yesterday about these community development institutions with a "Triple Bottom Line," I had not seen the Central Illinois 9/12 Project's nicely done series on the topic, which you can read on their Web site.

Meanwhile ShoreBank Pacific, a sister to the former ShoreBank under the parent ShoreBank Corporation (which will reportedly continue to exist), will merge with OneCalifornia Bank, another community development institution. The Puget Sound Business Journal had ShoreBank Pacific on its list of troubled banks, but its top executive disputed that characterization, according to the newspaper:

ShoreBank Pacific CEO Dave Williams took issue with the bank being described as “ailing” and issued this statement: “Our capital ratio at the time of the announced merger agreement was 8.6 percent. The consent order under which we are operating required us to find additional capital to divest ShoreBank Pacific from our Chicago holding company, ShoreBank Corporation, due to the ailing condition of our Chicago-based sister bank, ShoreBank. The merger agreement with OneCalifornia Bank satisfies that requirement.”

Apparently their Chicago backers didn't want any branch of the ShoreBank enterprise to fail, as the Seattle Times reports:

"Typically when the FDIC closes one bank in a holding company, they close all the banks in the holding company," said David Williams, CEO of ShoreBank Pacific. But in this case, he said, the Pacific Northwest community bank had a suitor and could stand on its own.

OneCalifornia is backed by a nonprofit foundation that was willing to assume its risks, something the original ShoreBank was unable to extract from its investor nonprofits like the Ford Foundation and John and Catherine MacArthur Foundation -- except with a FDIC rescue.

Related:

FDIC Seizes ShoreBank; Reinstalls Failed Management

ShoreBank to be Split and Saved?

Can Chicago Lobbying Save ShoreBank?

Is ShoreBank Sheila Bair's Baby?

Goofy Green Investments Fueled ShoreBank's Problems

ShoreBank President Uses Saul Alinsky Playbook

White House Denial on ShoreBank is Sestak-Like

'Firestorm' Promised to Save Politically-Connected Chicago Bank

White House Bails Out ‘Clinton’s Favorite Bank’ Through Goldman Sachs, Citigroup, GE

[jazusamo]

Followup Ping!

[Grampa Dave]

fyi

[rj45mis]

and just how much will taxpayers be on the hook for the unforeseeable future!

[jazusamo]

Meant to include you on followup.

[jazusamo]

Excerpt from first related link above:

“According to a press release, the FDIC Deposit Insurance Fund will take a $367.7 million hit in the transaction.”

I’m pretty sure there’ll be more.

[Nachum]

OK. So we know about the plea to Geithner, but that does not connect enough dots here. The article is worth noting as history, but not the smoking gun. Not yet.

[maggief]

Thanks for the ping.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

http://www.redstate.com/moe_lane/2010/08/24/jan-schakowsky-d-il-09-saves-shorebank-after-all/

Jan Schakowsky (D, IL-09) saves Shorebank after all.

Posted by Moe Lane (Profile)

Tuesday, August 24th at 8:30AM EDT
12 Comments

Back in May it was reported that the failing, yet politically-connected Shorebank in Illinois was to be bailed out. The bank actually closed last Friday, but was resurrected yesterday and turned into a new bank - one that will of course have no obvious relationship to Rep. Jan Schakowsky (IL-09), who lobbied very strenuously to save Shorebank… even though it’s not based in her district. It is, however, the bank that Schakowsky’s convicted felon husband Robert Creamer used to partially extricate himself from the consequences of his fraud scheme; the bank provided critical assistance to Creamer that allowed him to avoid default - which would have beneficial effects on his sentencing a decade later*. There is a strong whiff of this transaction being part of a quid pro quo - with the latter half being paid off, well, right about now.

If you’re wondering why Jan Schakowsky can get away with having her and her husband being tied up in a dirty bank deal without censure by the House of Representatives, while Rep. Maxine Waters is currently facing ethics charges for her and her husband’s involvement with OneUnited, the answer’s easy: Schakowsky is white, and is thus simply fundamentally real to Democratic leadership in a way that no African-American Member of Congress could hope to be to them. It should not be a surprise that House ethics investigations are being allowed to continue only against those legislators whose seats are considered locked-in by the Democrats anyway.

Yes, let me clear: I’m explicitly calling the House Democratic leadership a bunch of racists. They are, you know. And it’s never more obvious than when you consider the things that they don’t do, when they don’t have to.

Moe Lane

PS: Joel Pollak is the GOP candidate for IL-09, and he’s been all over this topic. I’ve met him: he’s a good guy. Check him out.

*It should hardly be a surprise that Creamer shows no particular remorse for his actions, besides the minimum required for appeals for clemency. Then again, why should he? From his point of view the worse thing that happened in his scheme was that he got caught.

[jazusamo]

Thanks for the post, Lane isn’t bashful. :)

[hoosiermama]

Hmmm would a “smoking gun” be a connection between Jan Schakowsky, and Ibama or Ibama and the bank? We know who has connections JJJ who IS connected to MO.

[Vaduz]

Timothy Geithner, which urged his intervention. No kidding democrets need a bank to launder union money.

[ridesthemiles]

UURC, Shore Bank was heavily involved with NObama & Rezsko & their real estate dealings.

[Liz]

ShoreBank is known as “Crime, Inc”..... has close ties to all the known (and unknown) Obama gangsters.

The bank had been under a so-called "cease and desist" order from the FDIC for more than a year, requiring it to boost its capital reserves.

The FDIC and Urban Partnership Bank agreed to share losses on $1.41 billion of ShoreBank's loans and other assets. And in an "unusual move," the FDIC allowed some of ShoreBank's executives to continue managing the restructured bank under its new name-----" Urban Partnership Bank." The recently hired ShoreBank managers "did not contribute to the bank's problems," the FDIC laughingly said.

ShoreBank lost $39.5 million in the second quarter as its real estate loans soured but was able to raise more than $146 million from several big Wall Street institutions. Members of the newly-chartered Urban Partnership Bank include Goldman Sachs Group Inc., Citigroup Inc, Morgan Stanley and Wells Fargo & Co. The MacArthur Foundation also owns a share, the FDIC said.

AND GET THIS The buzz is $75 million in anticipated fed funding from Obama's bailout stash for failing banks "never materialized."

ROTFL-----the truth is G/S surreptitiously got federal tax dollars to do the deal.....thanks to G/S insider, Rahm Emanuel. I just hope there's no illegal conversions of federal funds, wire transfers offshore, and other Wall Street shenanigans going on (/snix).

Wall Street knows how to make money disappear faster than a cream puff at a Weight Watcher weigh-in.

==================================

CUTE PUPPY DECONSTRUCTED THE INSIDER DEAL:

Basically, "open under new management and ownership" after offloading most of the illiquid "assets" to FDIC / insurance is a typical FDIC loss-share deal - to get other banks to take over the deposits.

Without loss-share transactions there would be no buyers and FDIC would have to keep managing the banks that weren't viable until they could unwind them.

Usually, under a loss-share agreement a failed bank deposits and some assets and current obligations (rents etc.) are sold to a single buyer bank with FDIC taking an immediate loss on the balance sheet for taking possession of illiquid assets and some debts, and the failed bank branches open the next day under the buyer bank's name.

In this case, because so many "investor" banks were participating in the "share-loss" purchase, they simply renamed the "new" bank, to avoid confusion and the old bank's "legacy".

[piasa]

Creamer /Project Veritas exposing Trump rally disruptors bump

[piasa]

bump

[piasa]

Second Veritas Video: DNC Operatives Admit They’ve Rigged Elections for Half a Century
http://townhall.com/tipsheet/cortneyobrien/2016/10/18/second-veritas-video-dnc-operatives-admit-theyve-rigged-elections-for-half-a-century-n2234110

[piasa]

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