* The FDIC’s deadline for Broadway Bank to find $85 million in new capitalization expires today, so Alexi Giannoulias’ family bank could get “eated” later this afternoon…
If a bidder has not been found for the Giannoulias family’s Broadway Bank, today could be the day federal and state regulators walk in and shut it down.
Nearly 90 days ago, the bank entered into a consent decree with government officials in which bank officials agreed to try to raise $85 million to recapitalize the bank. […]
It could be the FDIC found another bank willing to buy Broadway Bank. Broadway Bank officials won’t know until the regulators arrive.
Or regulators could wait another week past Monday’s 90-day deadline.
* If the seizure does happen today, you can expect a gigantified firestorm as hostile reporters and pundits try to force US Senate candidate Giannoulias off the statewide ticket. Politico set the tone with a story about how the White House refused to commit to getting the president involved in the campaign…
At the moment, the White House seems open to the idea of losing Obama’s old seat rather than putting the president’s prestige on the line for Giannoulias, the brash and boyish Illinois state treasurer — and onetime Obama basketball buddy — whose campaign has been rocked by the financial meltdown of his family’s bank.
Durbin said Emanuel was sympathetic to his pleas but ultimately noncommittal, telling him that the White House was “considering the race, weighing their options and weighing a decision on what to do.”
Politico reports that Giannoulias wasn’t even told that President Obama could be visiting Quincy soon, although the publication noted that other congressional candidates are grumbling about the same lack of communication from the White House. The publication also claims that it’s an “open secret” that the White House is watching to see if a bank failure forces Giannoulias out of the race before deciding what to do.
Sen. Dick Durbin was the focus of the article, and he was clearly trying to call out Obama for his inaction. But Durbin, who is Giannoulias’ campaign chairman, wasn’t exactly a 100 percenter today either…
To an extent, Durbin’s political stock is tied to Giannoulias’s, Democratic insiders say. As chairman of the campaign, Durbin could take some blame for a Giannoulias loss — just as he gears up for a possible majority leader’s race against New York Sen. Chuck Schumer this fall, and just as Schumer could get credit for helping guide New York Democratic Sen. Kirsten Gillibrand’s path to a likely victory.
But Durbin dismissed such talk, saying he expects Reid to win his reelection in Nevada and continue as majority leader. And he distanced himself from the problems of the candidate.
“There’s certain things I can control, certain things I can’t control,” Durbin said. “I’m not the candidate; someone else is. I can give advice and try to analyze this as best I can. Ultimately, Alexi has to make these decisions personally.”
That sound you just heard was the thump of Durbin throwing his little buddy under the bus.
The Giannoulias people say that this isn’t the first time he’s been under pressure to drop out of a campaign. When he first ran for state treasurer four years ago, Speaker Madigan tried to force him out so that his own candidate could win unopposed. After Giannoulias won the primary, reporters and pundits took notice that Madigan still seemed rather hostile to Giannoulias (because of allegations about the bank) and was distancing the state party from him. Then, last year when the White House was openly courting Lisa Madigan and others to run, Giannoulias was pressured in the media to drop off the ticket.
Through it all, he has perservered, and the candidate believes that come election day six months from now the bank failure will be old news and not a big deal.
The problem with that theory is that the state’s political reporters and pundits are infinitely more hostile to Giannoulias than anybody currently running for office here. They don’t show any signs of letting up, either. And the fire-roasting they are preparing for Giannoulias today will be a sight to behold…
Giannoulias’ campaign won’t talk specifically about the strategy for dealing with a bank failure. Spokeswoman Kathleen Strand said he will focus on the economy and creating jobs, arguing that the bank’s problems are not major issue for some people.
“We are going to keep talking to voters about what matters to them most,” she said.
Changing the subject won’t be easy.
“You can’t overcome that … especially Giannoulias, who four years ago ran for treasurer touting his experience and expertise. I mean, you can’t have it both ways,” said David Yepsen, director of the Paul Simon Public Policy Institute at Southern Illinois University in Carbondale. “This is going to be an indelible stain on him.”
* Also today, the Tribune published an op-ed by Giannoulias’ banker brother…
Over the past few years, we made decisions that — though sound at the time — resulted in a high level of nonperforming assets. We have paid a significant price for those decisions, but we can survive and, given time, thrive. To do this, we do not need assistance from taxpayers; all we need is patience from regulators. Where big banks got a bailout, all we ask is to be allowed to live, with the capital we have, until the market turns around — as it already has for the big banks.
There is little risk to such an approach and much to gain. Current regulators are relying on an outdated belief that a bank in trouble on some capital ratios should be shut down quickly as the most cost-effective solution. But most of today’s troubled institutions have low levels of capital because they are forced to value assets in the worst possible light at the worst possible time, and to realize these losses immediately. Given the global conditions, it is difficult to see how closing banks early is a lower-cost option. Why force a sale when the market is at the bottom? […]
We are not asking for a bailout, just time to turn things around. Our bank, our customers and our communities are all experiencing a great economic dislocation. Wall Street banks got taxpayer money to survive — all we seek is a chance to pull ourselves up.
We may not be too big to fail, but we shouldn’t be deemed too small to live.
The bank is currently turning a profit, so his ideas do make some sense. Lots of small banks are being gobbled up by the very same “too big to fail” institutions that got hundreds of billions in government bailouts - making them even bigger at a fraction of market rates because these post-seizure fire sales are quite yummy for them. But it’s highly doubtful that he has swayed the FDIC at all.