Illinois Republican Party

Why Does Alexi Need a Special Request to Give Back His Million-Dollar Payout When the Family Bank is Near Collapse?
2/22/2010

"If my family asks me, sure" - Chicago Sun-Times, February 22, 2010

Does Alexi need a special request to do the right thing and stop a potential taxpayer bailout for his family’s bank?

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Now 25 days since promising reporters he would answer questions surrounding his role in the near-collapse of his family’s Broadway Bank, the Illinois Republican Party is asking Democrat Alexi Giannoulias to explain why he needs to wait for a request from his family to return his million-dollar payout when the bank is already near collapse and it could help prevent a taxpayer bailout for the bank from the FDIC.

This morning, the Chicago Sun-Times reported that the Giannoulias-owned Broadway Bank "was struggling because it had relied so heavily on high-risk loans of the type Giannoulias approved as vice president" and added that Giannoulias' "Democratic primary election rival, David Hoffman, hammered Giannoulias on the stump with that fact." But when asked by the Sun-Times whether he would "give back any of that $1 million" in dividends he removed from the bank in 2007 and 2008, Giannoulias replied, "If my family asks me, sure."

"While Alexi Giannoulias refuses to answer basic questions about his risky loan schemes, reckless investments and ties to organized crime figures, the least Alexi can do is return his million-dollar payout he received from the risky banking practices and work to prevent a federal taxpayer bailout for the bank he helped bring near collapse," Illinois Republican Party Chairman Pat Brady said.

More than a week ago, the Chicago Tribune warned Giannoulias to stop his "stonewall" tactics and come clean on the questions he promised to answer. Two weeks ago, Giannoulias' campaign chairman, Senator Dick Durbin, called on Giannoulias to be more forthcoming regarding his pursuit of high-risk loans and investments during his time as Chief Loan Officer for Broadway Bank. Just before the primary election, the New York Times ran a story summarizing the risky loan practices Giannoulias embraced during his time at Broadway.

Now 25 days after Alexi promised to answer question, the following questions remain unanswered:

1) Under the FDIC Consent Decree, your family was required to put $19 million back into Broadway Bank by February 3rd. Was that deadline met and did you personally contribute to the first replenishment?

2) If the FDIC does takeover Broadway, will you pledge to return all dividends you received to help cover the costs the government would incur in covering Broadway’s deposits?

3) You and your family took $70 million in dividends in 2007 and 2008.[1] That money would have gone a long way toward properly capitalizing Broadway. In hindsight, were those payments wise?

4) During the time you were the chief loan officer at Broadway Bank, risky construction and development loans went from 25% of the bank’s loan portfolio in 2002 to 46% in 2006.[2] More than 50% of Broadway’s bad loans, $138.5 million as of December 31, 2009, were construction and development loans[3] and the FDIC has ordered Broadway Bank to cease investing so heavily in them.[4] In hindsight, was it prudent to put so many of Broadway Bank’s eggs in the construction and development basket? And if it was not, don’t you share some of the responsibility for Broadway’s current troubles?

5) When running for Treasurer your “financial expertise” as a community banker was your central argument for why the voters should choose you.[5] While at Broadway Bank, did your “financial expertise” lead to you express any concerns about the bank’s growing reliance on brokered deposits, which stood at 80% of all deposits when you left the bank?[6]

6) Broadway Bank grew rapidly while you worked there. Your campaign website while running for Treasurer stated “As vice-president and senior loan officer at Broadway Bank, Alexi played a vital role on the bank’s management team that doubled its asset size to more than $750 million.”[7] In hindsight, was playing a “vital role” in growth fueled largely by risky loans and expensive brokered deposits something to be proud of?

7) You defended loans you made to Michael “Jaws” Giorango -- a convicted mobster, bookie and pimp -- by claiming that the loans themselves were financially sound. Those loans are now in foreclosure.[8] Do you still think those loans were sound?

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[1] http://www.chicagobusiness.com/cgi-bin/article.pl?article_id=32332&seenIt=1
[2] http://www.chicagoreader.com/chicago/can-alexi-giannoulias-family-bank-obamas-senate-seat/Content?oid=1245291
[3] Broadway Bank 12/31/2009 Call/TFR financial report, FDIC
[4] Broadway Bank Consent Decree, page 12
[5] Financial, legislative experience at odds in state treasurer race, Chicago Defender, November 3, 2006
[6] Broadway Bank 12/31/2006 Call/TFR financial report, FDIC
[7] Giannoulias 2006 campaign website, archived at: http://web.archive.org/web/20060820191858/www.alexiforillinois.com/meet_alexi.html
[8] http://www.chicagobusiness.com/cgi-bin/article.pl?articleId=32169
[9] http://thecapitolfaxblog.com/2007/12/04/this-just-in-90/

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