Regulators on Friday seized notable Chicago-based community development bank ShoreBank after Wall Street backers failed to rescue the institution, and its deposits will be taken over by a newly-chartered bank.
ShoreBank, a privately owned bank with a national reputation for its philanthropic activities, had received multi-million dollar investment commitments from Goldman Sachs, Citigroup, JPMorgan and Bank of America, as well as from General Electric.
But the bank, which was put on the ropes when the recession hit its lower-income borrowers especially hard, was unable to secure the funds it was seeking from the government’s Troubled Asset Relief Program, or TARP, it needed to match private-sector pledges.
ShoreBank’s deposits will be taken over by a newly-chartered institution called Urban Partnership Bank. Its 15 branches also will shift to the new bank.
The Federal Deposit Insurance Corp said the bank had $2.16 billion in assets and $1.54 billion in deposits.
Who is “Urban Partnership Bank?” This press release lists officials with Shorebank e-mail addresses as the contacts for the Urban Partnership.
And many of the same old Big Biz investors and left-wing activists who tried to prop up Shorebank are investors in the new reincarnation:
The group seeking to buy ShoreBank, the ailing South Side lender expected to be seized by federal regulators Friday, plans to name former First Chicago executive Bill Farrow as the chief executive and president of the institution if it succeeds at bidding for certain assets and deposits of the failing bank.
It means that three former First Chicago executives will be running the show if their bid succeeds.Many of the large institutions that earlier had committed about $150 million to Chicago-based ShoreBank as it unsuccessfully sought $75 million in government aid will be investors in the new bank, whose charter is named Urban Partnership Bank.
They’ll likely put in about the same amounts as before, though a few smaller contributors might have dropped out. Besides big banks, the group also will include philanthropic groups, insurance companies and socially minded individuals who believe in ShoreBank’s mission of serving underserved communities in Chicago, Detroit and Cleveland.
As I noted several weeks ago, the White House denies it has played any role in trying to broker a bailout. But Shorebank’s Windy City ties to Obama are too numerous to ignore. And so is this administration’s penchant for bullying and bribery.
A crony bank by any other name smells just as rotten.
From ZeroHedge: Failure Of Obama’s Pet ShoreBank Costs Taxpayers $368 Million, Which Immediately Goes To Goldman Sachs Among Others…
And just who is this “Urban Partnership Bank” that is receiving a taxpayer subsidy of $368 million? Why all the usual suspects of course: “The significant investors in Urban Partnership Bank are American Express Company, Bank of America, Citigroup, Ford Foundation, GE Capital Equity Investments, Inc., Harris Bank, the John D. and Catherine T. MacArthur Foundation, JPMorgan Chase & Co., Key Community Development Corp., Morgan Stanley, Northern Trust Corporation, PNC Investment Corp., State Farm Mutual Automobile, The Goldman Sachs Group, Inc., and Wells Fargo & Company.” And so the old “out-of-one-taxpayer-pocket-and-into-another-Wall-Street-pocket” game continues, only this time it includes administration darling banks that should have been liquidated long ago.
By keeping ShoreBank artificially alive for far longer than it deserved, the assets amortized far more than they would have had it been taken into receivership by a non-conflicted bank, and thus the final cost to taxpayers would have been far less.
As it stands, Goldman and 11 other banks are receiving a multimillion dollar gift to conduct a portfolio liquidation run-off of ShoreBank’s assets, while merely making sure existing deposits are serviced.