![\"\"](\"http:\/\/chicagopressrelease.com\/wp-content\/uploads\/2010\/01\/ALEXI-GIANNOULIAS-illinois-senate-race.jpg\" "\\"ALEXI-GIANNOULIAS-illinois-senate-race\\"")
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.<\/p>\nAlexi 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.<\/p>\n
Broadway Bank is the source of the wealth that has made him a viable candidate. It also provides his main claim to professional expertise, the ability to write loans and tally a balance sheet.<\/p>\n
But now the precipitous implosion of the bank\u2019s finances — punctuated last week by an agreement with regulators that the bank must raise more capital or else — is a potentially serious blow to Mr. Giannoulias\u2019s viability in the race for the United States Senate seat once held by President Obama.<\/p>\n
Mr. Giannoulias, 33, has ducked all but the most general questions about which loans he approved that might have contributed to the bank\u2019s trouble. He said there would be time later to get into such details. <\/span><\/p>\n I interpret that to mean: \u201cI hope I can get this past my fellow Democrats. I\u2019ll worry about my Republican opponent later.\u201d<\/p>\n Though he would not talk to the Chicago News Cooperative<\/a>, in public statements Mr. Giannoulias has noted that four years have passed since he left the bank. In a statement, the bank said only 9 percent of the $242 million in nonperforming assets currently on its books originated under Mr. Giannoulias.<\/p>\n But here is an inconvenient fact about bank failures: They do not happen overnight. A dollop of reckless lending here, a dash of destabilizing hot money there, hide a few troubles over there. Let that simmer for a while and, voila!, an insolvency souffl\u00e9.<\/p>\n After law school, Mr. Giannoulias went to work full-time at the bank in 2002. He quickly became a senior loan officer and then a vice president. Whether merely by coincidence, or because of the ambition and aggressiveness of its well-pedigreed new junior executive, the bank\u2019s profile changed sharply between then and when Mr. Giannoulias resigned after winning the race for state treasurer in November 2006.<\/p>\n According to a review of the bank\u2019s annual filings with the Federal Deposit Insurance Corporation<\/a> from 2001 through Sept. 30, 2009, the bank plunged into the sort of lending that has caused bank crises across the country: construction and development loans.<\/p>\n Mr. Giannoulias\u2019s lending department sharply increased the construction and development portfolio to $356 million by 2006, six times the level it had been before he went to work there.<\/p>\n In 2006, the bank set aside $2.2 million as a provision against loan losses, a safety measure that federal regulators require banks to take. Despite its large increase in risky loans, Broadway only doubled its bad-loan reserve in the time Mr. Giannoulias was there.<\/p>\n A bank spokesman said he had been only lightly involved during that period.<\/p>\n Construction-related lending jumped to more than triple the bank\u2019s required regulatory capital during this period, and the loans started to go bad.<\/p>\n By the time Mr. Giannoulias departed, Broadway was left with nearly $14 million in real estate on its books, more than 10 times the level when he arrived. Foreclosures take time, though — often about 18 months. And within two years of Mr. Giannoulias\u2019s departure, the bank was left holding $38 million in real estate.<\/p>\n The 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.<\/p>\n During Mr. Giannoulias\u2019s time at the bank, brokered deposits catapulted fourfold, to $640 million.<\/p>\n The typical bank at this point was growing brokered deposits at about 9 percent a year. Mr. Giannoulias\u2019s bank was increasing its load by as much as 48 percent in a single year. Broadway Bank\u2019s brokered deposits reached 80 percent of total deposits in 2006.<\/p>\n No one knows for certain how big a role Mr. Giannoulias played in these decisions. As Broadway\u2019s 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.<\/p>\n Certainly, he took part in the family\u2019s 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.<\/p>\n Mr. Giannoulias told reporters that a time would come when he could answer questions about what happened at his family\u2019s bank. Here is hoping there is plenty of time, because questions keep mounting faster than the troubles at Broadway Bank.<\/p>\n David Greising is a veteran business writer and deputy editor of the Chicago News Cooperative.<\/p>\n Read the original article from the Chicago News Cooperative<\/a>.<\/p>\n<\/div>\n 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. Broadway Bank is the source of the wealth that has made him a viable candidate. It also provides his main claim to professional expertise, the ability […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-259819","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/259819","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=259819"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/259819\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=259819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=259819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=259819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n<\/img><\/a>
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