Senate candidate's family bank hits troubles
Illinois Treasurer Alexi Giannoulias' struggling family bank was slapped with extensive federal oversight Wednesday, bringing a thorny problem to the forefront of his Democratic Senate race.
With the primary just days away, Chicago's Broadway Bank - founded by Giannoulias' father and the politician's employer before he became treasurer - entered into a 'consent order' with regulators requiring executives to beef up cash reserves, provide audits of their management and submit a litany of internal policies and actions for review in a bid to right the institution.
The news drew quick denunciation from Giannoulias' opponents in the Democratic primary to replace outgoing incumbent Roland Burris.
Cheryle Jackson, who has been relatively subdued in her attacks to date, called on Giannoulias to drop out of the race.
"Giannoulias' actions have made him unelectable, probably in the primary and certainly in the general," said the former Chicago Urban League president and spokeswoman for Gov. Rod Blagojevich.
Former Chicago Inspector General David Hoffman, who has made Giannoulias' bank the centerpiece of recent attack ads, said the bank's problems fall on Giannoulias' shoulders.
"Today's news about Broadway Bank provides further evidence of what a disaster Mr. Giannoulias would be as the Democratic nominee for U.S. Senate," said campaign manager Michael Powell.
But Giannoulias issued a statement painting his family's community bank as just another victim of the recession like scores of other institutions. Giannoulias left the bank as chief loan officer in 2006 as he campaigned for state treasurer.
"In the midst of a deep recession brought on by bad decisions in Washington and lax oversight on Wall Street, hundreds of community banks are struggling, and Broadway Bank is no exception," Giannoulias said. "I have not been there for nearly four years. My understanding is today's agreement gives the business a plan for moving forward."
The news comes at a time when bank bailouts and loan practices that led to the housing market collapse continue to spark anger among people in Illinois and nationwide.
On Wednesday, federal and state regulators issued a consent order with the bank agreeing to raise millions of dollars in cash reserves to improve its ratio of cash to outstanding loans. Broadway Bank also must hire an outside consultant to evaluate senior staff and submit reviews of its current loans and plans to recover.
The bank has been struggling, officially rated as "undercapitalized," since the crash of the housing market.
Broadway executive Kaushik Pancholi didn't return a call seeking comment Wednesday. In a letter to employees on Wednesday, he opened by writing, "As you know, the current economic environment has presented challenges for many banks across the country, including our own."
Meanwhile on the campaign trail, Hoffman is touting his endorsement from former Illinois Sen. Aldlai E. Stevenson III, who represented the state in the 1970s.
Jackson is holding an event with NBA star Magic Johnson Thursday evening followed by a campaign fundraiser headlined by hip hop artist Lupe Fiasco.
In other news, Burris would not reveal Wednesday who he is supporting in the Democratic Senate primary for his seat. Burris was appointed by Blagojevich after Barack Obama won the presidency. He is not seeking election.
Other challengers include Burr Ridge radiologist Robert Marshall, who has previously run as a Republican.
Daily Herald reporter Chase Castle contributed to this report.