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* The Alexi Giannoulias campaign was probably hoping to change the subject this morning…
Democratic Senate candidate Jacob Meister dropped out of the race with two days to go and endorsed rival Alexi Giannoulias.
Meister, a lawyer who is openly gay, made his announcement this morning at a Giannoulias rally in Chicago.
Meister was having difficulty gaining much traction in the race. A recent Tribune poll showed him garnering only 1 percent of support.
During debates, Meister has defended Giannoulias against attacks made by rival David Hoffman. He also has taken exception to comments Hoffman has made about being the only candidate to be married with children. He said such comments were insulting to gays who are unable to legally marry.
Meister’s one percent means zip, and he dropped out so late that he’ll still be on the ballot, but a “fresh” story like this could step on the “older” story about the family bank problems.
At times, Meister almost looked like a stalking horse for Giannoulias. Cheryle Jackson said as much today…
“This was not a surprise,” Jackson said of Meister’s move. “This is something we knew all along, that he was in the race to help the treasurer. That being said, he was only pulling 1 percent at best. So I think it was inconsequential.”
But Meister called “preposterous'’ the suggestion that he was a Giannoulias pinch-hitter from the start.
“The suggestion that I was in any way recruited or in cahoots with Alexi or anyone in his camp is ridiculous,'’ Meister said.
* Complicating matters for Giannoulias today was the fact that a New York Times columnist wrote a brutal piece in today’s edition…
Alexi Giannoulias would be nothing in Illinois politics if not for Broadway Bank. Now the near-failure of that family-owned bank is threatening to make him a political non-entity again.
More…
The [family bank’s] 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.
During Mr. Giannoulias’s time at the bank, brokered deposits catapulted fourfold, to $640 million. The typical bank at this point was growing brokered deposits at about 9 percent a year. Mr. Giannoulias’s bank was increasing its load by as much as 48 percent in a single year. Broadway Bank’s brokered deposits reached 80 percent of total deposits in 2006.
No one knows for certain how big a role Mr. Giannoulias played in these decisions. As Broadway’s top lending officer, he must have influenced the move into construction lending. As a connected family member, he was probably present during discussions of the hot-money play. Certainly, he took part in the family’s decision to take out some $70 million in dividends from the bank in 2007 and 2008, even as it careened toward a consent decree with the F.D.I.C.
But the column was a whole lot of false conjecture, according to the campaign…
Giannoulias has admitted to making loans over the years that, in hindsight, he would not have made. He has pointed out that 700 community banks around the country have entered into consent decrees in recent years.
Giannoulias emphasized he has had no role in running the bank for four years. He is a 4 percent non-voting stock owner. The decree requires the Giannoulias Family re-capitalize the bank. Will Giannoulias chip in? “If they ask, of course I’ll help out,” he said.
The family withdrew $70 million from the bank in recent years — primarily to pay debt on Giannoulias’ father’s estate, Giannoulias’ campaign has said. Only a small fraction of that went to Giannoulias
Among the loans Giannoulias has gotten heat for:
* More than $10 million from 2001 to 2005 to alleged Father & Son Russian mobster team Lev and Boris Stratievsky. Father Lev has passed away. Son Boris is in jail facing money-laundering charges. Broadway funded development projects some on the South Side — that tenants and city attorneys complained were roach motels. Broadway has been unable to collect on the loans.
* About $12.9 million to convicted bookmaker Michael Giorango for a Miami Beach hotel and a Hollywood, Fla., restaurant, among other ventures, according to Crain’s Chicago Business. Broadway has sued Giorango and his partner, Demitri Stavropoulos, convicted of running a betting operation in Chicago, seeking to get the money back. Giannoulias initially downplayed his relationship with Giorango, noting the loans to him started before he joined the bank. Later he said he went to Miami to meet Giorango and inspect the property, and that another $3 million loan to Giorango was for a South Carolina casino.
* Related…
* AP: Meister drops out, backs Giannoulias for Senate
* Hoarse or not, Senate candidates step up pitch
* Democratic Senate candidates warn of GOP tide
* Reuters: Could Illinois’ Senate race copy Massachusetts?
posted by Rich Miller
Sunday, Jan 31, 10 @ 6:21 pm
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