by Pete the Banker A few weeks ago several of the largest Wall Street firms including Goldman Sachs, JP Morgan Chase and Morgan Stanley at the Administration’s urging agreed to contribute some $140 Million to help bailout the Chicago Based community lender, ShoreBank. In addition ShoreBank was to receive TARP funds of some $25 Million to help it avoid insolvency and FDIC liquidation. This incidentally coincided in time frame with the Administration’s attack on Goldman Sachs and the other lenders over the Structured Residential Mortgage Backed Securities Portfolios.
Fox News is reporting that “Controversy continues to swirl around the Obama administration’s bailout of the politically connected community lender ShoreBank, with new calls for an investigation into how the bank was able to secure tens of millions of dollars in Wall Street cash to stay alive” and that “Several executives at the banks told FOX Business that they received some political pressure from administration officials to contribute the money, which when combined with government bailout funds from the Troubled Asset Relief Program, or TARP, would prevent a government liquidation of the bank.”
Increasingly, it looks like this rescue effort will fail (here). Spencer Bachus, the ranking Republican member of the House Financial Services Committee, has called for increasing scrutiny including appointment of a special Inspector General and is calling upon President Obama to provide communication records related to the ShoreBank matter.
ShoreBank which has a Portland Bank Branch has been praised by President Obama in the past for its efforts to lend in poorer neighborhoods and also for its “Green” lending philosophy. Notably, its Chairman Ronald Grzywinski is one of the few Bankers in the country who has testified before Congress in favor of the Community Reinvestment Act. Obama’s Senior Adviser, Valerie Jarrett also has past connections with its Bank Directors through several Chicago area Non-Profit Boards. Jarrett to date has denied any involvement in pressuring Money Center Banks to lead the rescue effort.
But one has to wonder why of all the hundreds of small banks in trouble in this country, ShoreBank was singled out by the Administration and the New York Money Center Banks for rescue?
Tell ’em where you saw it. Http://www.victoriataft.com