For Immediate Release - May 18, 2010
Contact 312-201-9000 info@ilgop.org
Alexi Giannoulias Renews Campaign to Mislead Voters on Risky Lending Practices at Broadway Bank
False Giannoulias Claim: “There was never any risky lending or any reckless lending practices.”- Alexi Giannoulias, NBC 5 Chicago, May 18, 2010
What the State of Illinois Said: “Upon due consideration of the evidence presented to me, and pursuant to my statutory duties and powers as Director of the Illinois Department of Financial and Professional Regulation, Division of Banking, I find that Broadway Bank, Chicago, Illinois (the "Bank") is conducting its business in an unsafe and unsound manner.” (Jorge Solis, Director, Illinois Division of Banking)
What the Experts Said: "The real question is why it wasn't closed a long time ago," says Washington, D.C.-area banking consultant Bert Ely. "It was a badly run bank." (Chicago Tribune Editorial, April 26, 2010, “Who killed Broadway Bank?”)
What the FDIC Said: “The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $394.3 million.”
What Demetris Giannoulias Said: Demetris Giannoulias said the bank learned of Giorango's bookmaking and prostitution promotion convictions from a spring 2004 Tribune report detailing those cases. "But we're a relationship bank," he said. "So somebody comes in and in all his dealings with the bank seem to be on the level, everything makes sense, nothing seems illicit or untoward. Just because somebody gets a bad article written about them there's no reason to say, 'Hey, listen, I'm going to kick you out the door because you don't win a popularity contest.' We didn't think he was doing anything illegal." (Chicago Tribune, “Giannoulias family bank made $20 million in loans to felons,” April 2, 2010)
What the Chicago Tribune said: “Giannoulias' claim smacks of desperation. Anyone truly looking for culprits would start with the people who ran Broadway. Most banks have been able to weather the recession. This one failed mostly because of its own mistakes.”
What the Chicago Sun-Times Said: “Valid questions remain about whether Broadway Bank, before and after Giannoulias worked there, took imprudently high risks with both deposits and loans. And a certain vagueness remains as to why the family withdrew tens of millions of dollars in dividends in 2007 and 2008…Either way, fairly or not, he doesn't come out of this looking good.” (March 4, 2010)
What the New York Times Said: “The move into real estate coincided with a headlong push into brokered deposits. This is quintessential hot money — large amounts that jump from bank to bank, each bank offering the lure of high interest , which the banks then must fund by making ever-riskier loans.”
What Crain’s Chicago Business Said: “But [Alexi] did not dispute that the small Chicago community bank effectively changed its business model during his tenure, sharply ramping up its exposure to oft-risky real estate loans to nearly half of its portfolio, and relying for deposits not on local savings accounts but brokered, relatively high-interest deposits from all over the county.”
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