The Central Illinois 9/12 Project became the first to expose — beginning this past March on BigGovernment.com – Shorebank’s extensive green and microfinancing agendas, in anticipation of that bank’s impending bailout. Shorebank, a Chicago-based, community investment bank, is focused on domestic and foreign microfinancing, is heavily engaged in the financing of “green” projects and “green” jobs, and has a host of ties to the Obama and Clinton administrations. The Central Illinois 9/12 Project has most recently highlighted the bank seeking and obtaining funds from larger banks–such as Chase, Banks of America, and Goldman Sachs — to secure the necessary funding to remain viable.
The fact that Shorebank had the opportunity to be rescued while other banks were allowed to fail proved to be curious to Illinois residents, and for a time it was unknown if the bank would receive enough funds from private entities to qualify for a federally-funded bailout. Such curious treatment sent up a red flag for some Congressional members and thus influenced the formation of the financial reform bill. Through an amendment offered by Congresswoman Judy Biggert and Congressman Spencer Bachus, the House Financial Committee voted to approve inquiries into the negotiations between the White House and any bank that had been ordered to cease engaging in unsound banking practice, via an amendment to the House finance reform bill in late June.
The Central Illinois 912 Project has learned from an assistant for Biggert that Biggert’s office sent a letter to the White House regarding this probe, but the White House denied receiving that initial letter. Biggert’s office sent a second letter which the White House acknowledged receiving; however, the White House has never responded to it. This probe would not only have been for Shorebank, but for all other banks that have received bailout funds since June 2009 — and it would have prevented those banks from receiving any TARP funding while under investigation. Potentially, if the bill was passed and signed into law and the probe was started within the given amount of time, Shorebank would have folded without the needed TARP funds to match the private sector’s matching funds (i.e., funds from larger banks). However, when this bill was passed by the House, the amendment was removed by Senate negotiators.
Senator Christopher Dodd cited his concerns during the negotiation process about governmental “overreach” if the aforementioned amendment became a part of the financial reform bill.
The finance reform bill was passed in the Senate on July 15th and signed by President Obama on July 21st.
In the absence of a probe, Shorebank continues to seek necessary funds to prevent it from failing, which according to second quarter reports, now means it needs to raise $190 million, rather than $150 million, to remain eligible for federal funding. Recently, the bank was given a three week extension by its large bank backers, to raise the necessary private funding needed to make it eligible to receive federal TARP dollars. This extension was given, even though Congress, in order to help pay for the finance reform bill, killed a bill in late June that would have provided additional bailout funds to struggling banks. However, an anonymous“high ranking administration official” said that Shorebank and other struggling banks would still be eligible if they applied prior to June 25th, which Shorebank did. Now Shorebank is still potentially eligible to be “bailed out” by TARP funds in conjunction with private funds under the conditions specifically reserved for Community Development Financial Institutions.
Without the probe into Shorebank, it will remain unclear just how entangled the Obama administration is with the failing, but perhaps soon-to-be-saved, bank. With the assistance from bailed-out large banks, the removal of the probe amendment, the promise of bailout funds in spite of a lack of bailout legislation, and an extension of the funding security deadline, the conclusion may be reasonably inferred that Shorebank may very well be saved. The question is this: “Does the end justify the means?”
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