Giannoulias confronts bank questions for Senate run

Illinois Treasurer Alexi Giannoulias confronted questions about his family's Chicago bank as he sought to boost his bid for the U.S. Senate seat previously held by his friend President Barack Obama.

Broadway Bank, with $1.2 billion in assets, has clouded the political career of Giannoulias since his first bid for office in 2006, when at age 30 he became the youngest U.S. state treasurer.

The controversy stems from Broadway loans made to a convicted bookmaker and to convicted Illinois influence peddler Antoin "Tony" Rezko.

"Tony Rezko's company has received loans from many banks in Illinois," Giannoulias said at a Chicago news conference called to discuss expanded financial regulation.

Giannoulias, 33, is a former senior loan officer and vice president of the bank, founded in 1979 by his deceased father, Alexis Giannoulias.

A top White House adviser recently expressed concern about the contest to fill Obama's former Senate seat, making clear Giannoulias was not his top pick.

David Axelrod, a senior Obama adviser from Chicago, conceded that he and the president failed to persuade Illinois Attorney General Lisa Madigan to run for Senate, according to a Nov. 22 story in the New York Times.

"She would have walked into the seat," Axelrod told the newspaper.

Giannoulias said there was never any "confrontation" over the White House efforts to get Madigan to run in February's Democratic primary.

"She's been doing this longer," he said. "She's got great name recognition, terrific polling numbers."

Giannoulias said he only owns 3.6 percent of Broadway Bank and should not be held accountable for financial challenges it's now facing.

"I haven't been there for almost four years," he said. "I have nothing to do with the management or operation of the bank."

Obama endorsed Giannoulias in 2006, and his Senate campaign banked at Broadway. The two men played basketball together on several occasions during the presidential race, including on Election Day, and Giannoulias helped Obama tap Chicago's Greek community for campaign contributions.

Some of the Broadway loans that have generated controversy involve Michael Giorango, a convicted bookmaker and prostitution-ring promoter.

Obama's former Senate seat is held by Senator Roland Burris, a Democrat who has said he does not plan to run in 2010 after being appointed to fill the position in December 2008 by ousted Illinois Governor Rod Blagojevich.

The U.S. Senate Ethics Committee admonished Burris, 72, on Nov. 20 for giving "inconsistent" and "misleading" testimony regarding his appointment to fill the seat.

Blagojevich was removed from office in January for abuse of power and faces criminal charges of trying to trade the Senate seat for campaign cash or other favors. He has denied the charges and maintains his innocence.

Axelrod told the Times he is concerned about the Blagojevich scandal and how it might help Republican Mark Kirk, 50, an Illinois congressman running for the seat.

"The Blago saga will hang heavy over our politics, and that's what Kirk's banking on," Axelrod told the newspaper.

Axelrod didn't respond to an e-mailed interview request from Bloomberg News.

Giannoulias said he, too, is concerned about the role Blagojevich could play in the Senate race.

"There are challenges for Democrats throughout the state of Illinois," he said. "There is a dark cloud over everyone's head."

Giannoulias said he will need to remind voters that he never had strong ties to either Blagojevich or Rezko.

"If it becomes a Rezko conversation, I have never received a campaign contribution from him," he said. "Mark Kirk has."

After the news conference, Giannoulias told WBBM-TV that most of the loans in question were approved after he left the bank.

He also defended $70 million in dividends paid by the bank holding company in 2007 and 2008 to family members, weakening its balance sheet.

"Most of it was used for income-tax purposes," he said. "A lot of those dividends were used to help settle the estate of my father."

Giannoulias said about $1 million of the $2.5 million he received from the dividend payment went to pay federal taxes.

Cheryle Jackson, a former Chicago Urban League president and former Blagojevich spokeswoman, also is running for the Democratic nomination, along with former Chicago Inspector General David Hoffman and attorney Jacob Meister.

Giannoulias said at the news conference that Illinois is "within weeks" of a settlement with OppenheimerFunds Inc. over losses Illinois parents experienced through the state's Bright Start College Savings Program.

The treasurer's office said in June it had reached a tentative agreement to recover $77 million parents lost in 2008 in what was supposed to be a conservatively managed bond fund.

An agreement by the company was announced Nov. 19 to pay $20 million to settle a lawsuit by the state of Oregon alleging the New York-based money manager made inappropriate bond investments for a college-savings plan. Similar claims have been made in Illinois, Texas, Maine, Nebraska and New Mexico.