Feds shut down bank owned by Giannoulias

Illinois Treasurer Alexi Giannoulias appeared undaunted by the shuttering of his family's bank, saying he would continue his bid to keep President Barack Obama's old Senate seat in Democratic hands with renewed purpose.

"My campaign for the United States Senate goes forward with a renewed determination to turn Illinois' economy around and to fix what's broken in Washington, D.C.," he told reporters late Friday, just hours after regulators shut down Broadway Bank.

The closure was expected but still presents an election challenge for Giannoulias, who worked as a senior loan officer at the bank until he was elected treasurer four years ago.

Broadway Bank, which was heavy into real estate loans and lost $75 million last year, had been given until Monday to raise about $85 million in new capital, but the Federal Deposit Insurance Corp. announced at the close of business Friday that Broadway was among seven Illinois banks that had failed.

Giannoulias, 34, has tried to take some of the political and public relations sting out of the collapse, acknowledging that the bank was likely to fail but blaming the bad economy. He said the business was financially healthy when he left four years ago.

Late Friday, Giannoulias' voice broke as he talked about the collapse and vowed to work harder in his bid to win the Senate race. He said he knows first hand the impact that the economy has had on people and businesses in Illinois.

"There was no bailout for my father's bank. It is an incredibly sad and heartbreaking day for me and for my family. This bank has helped thousands of people when no one else would give them a chance," he said.

His Republican opponent, U.S. Rep. Mark Kirk, has made the bank's finances a central issue in their Senate race.

"While years of risky lending schemes, hot money investments and loans to organized crime led to today's failure, it's a sad day for Broadway Bank employees who may lose their jobs due to Mr. Giannoulias' reckless business practices," Kirk spokeswoman Kirsten Kukowski said in a statement Friday night.

Regulators planned to work through the night to close out Broadway's books and the branches would open normally on Saturday, said FDIC ombudsman's office spokesman Rickey McCullough.

All of Broadway's deposit accounts, excluding certain brokered deposits, were transferred to MB Financial. Former Broadway employees would become employees of MB Financial Bank, McCullough said.

Some leading Republicans seemed reluctant to try to score political points from the closure. Illinois Republican Party chairman Pat Brady declined to comment, as did former Republican Gov. Jim Thompson.

"I know Alexi," Thompson said. "I'm sure this is not an easy time for him."

Giannoulias' campaign and Democratic insiders have maintained he can still beat Kirk, a moderate Republican and an officer in the Naval Reserves. Democrats outnumber Republicans in Illinois, and Obama remains a popular figure in the state.

On Friday, before the bank failure was announced, the White House said Obama intends to help Illinois Democrats "up and down the ballot."

"I think that the White House's comments tonight that they're going to come to Illinois and help out is great. I'm looking forward to it," said Giannoulias. He doesn't plan to be in Quincy next week when Obama makes a stop there.

Joey O'Neill, a Broadway customer for 20 years said Friday that he won't hold the bank's failure against Giannoulias.

"They've always been good to me," O'Neill said before the bank closure was announced.

Giannoulias' family could collect millions in tax refunds by writing off Broadway Bank's losses. Giannoulias said he wouldn't take advantage of a special provision made available in the stimulus bill for writing off business losses. He couldn't say if others in his family would.

"Aside from the personal loss of what took place today, my family will be taking a massive financial loss," he said.

Kirk Ã¢â‚¬â€ť who raised $2.2 million in the first quarter of the year compared to $1.2 million for Giannoulias Ã¢â‚¬â€ť also has criticized some decisions made while Giannoulias worked at the bank, including revelations that it had loaned $20 million to two convicted felons.

Giannoulias' campaign has portrayed the loans as old news that he has addressed before. He has said the bank's relationship with one man started before he worked there.

With the election nearly seven months away, the campaign has time on its side to try to repair any damage and change the focus of the race Ã¢â‚¬â€ť and help Democrats avoid the embarrassing loss of another high-profile Senate seat.

Giannoulias said Friday that the bank's troubles are not what voters talk to him about when he travels the state. He said they are concerned with jobs and the economy.

"I have a new perspective on just how tough it is out there for so many people and that's what's going to make me fight even harder and work even harder to make sure that people understand we cannot afford to go back to the failed and reckless economic policies that have put this economy on the precipice of disaster," he said.

The other six Illinois banks that closed were New Century, Citizens Bank & Trust Co. and Lincoln Park Savings in Chicago, Amcore Bank in Rockford, Wheatland Bank in Naperville, and Peotone Bank and Trust in Peotone, the FDIC said. Customer accounts are insured by the FDIC up to $250,000.