Republicans on the House Financial Services Committee want to
find out if anyone in the Obama White House attempted to
influence the financial bailout of a well-known Chicago-based
“community bank,” which faced FDIC closure last week, and which,
going back to the Clinton Administration, has had close ties
to ACORN and the leftist community-organizing world of Chicago.
The story about the bailout attempt of ShoreBank first
began breaking last Thursday night. The FDIC was demanding that
the bank have $125 million in investments by Friday, but
discussions to bail out the bank, which has close ties to both
senior members of the Obama Administration, as well as the
Clinton family, went deep into the weekend as Chicago politicians
scrambled to save the bank.
Focus on the White House’s role is due in large part to the
ties senior staffers there have to the investors and management
of the bank, which started out as a community bank, and lately
has been deeply involved in “micro-financing” and “green” loans.
In 2006, before his Presidential race, then-Sen. Barack
Obama visited
his father’s homeland of Kenya, and around the same
times ShoreBank donated $1 million to that country to assist in
micro-loan programs there. At the time, Obama officials said it
was a coincidence that ShoreBank made the contribution to Kenya.
According to Department of Energy sources, disgraced Obama
Administration “green” adviser Van Jones was a
touter of the bank’s efforts — and an account holder — though
he may not have had much to do with the bank receiving more than
$30 million in funds to underwrite green projects.
Senior White House aide Valerie Jarrett
appears to be the central figure in the Financial Services’
interest, according to Republican staffers with ties to the
committee. “We have the Wall Street Journal reporting
that no White House contacts were made on behalf of the bank with
outside investors, but you keep hearing from those involved
directly in the discussions that the White House appears to be
all over this thing,” says one staffer.
Last week Eugene Ludwig, a former U.S.
comptroller of the currency, who is working with ShoreBank to
find financing to save it, held several individual and conference
calls with senior officials from a number of different banks,
including Goldman Sachs Inc., Bank of America Corp., Citigroup
Inc. and J.P. Morgan Chase & Co., as well as several other
foreign banks, seeking funding. “If you were on the call, the
inference was that the White House wanted this bank saved.
Obama’s name wasn’t invoked. Jarrett’s or [Rahm]
Emanuel’s names weren’t invoked. But the
implication was there,” a senior lobbyist for one of the banks
said. “The White House would look favorably on this bailout.”
Ludwig has stated publicly that to the best of his knowledge, the
White House was not involved in lobbying efforts on the bank’s
behalf.
But Republican committee staffers point to the fact that
Goldman Chief Executive Lloyd Blankfein until
late last week had declined to invest in ShoreBank, but then
apparently had a change of heart and began calling other banking
leaders to build support. Goldman’s stake: $20 million. “Given
the crap Blankfein has been taking, you have to wonder what
happened between his saying no and then saying yes,” says one
Finance Committee staffer. “It’s not like the deal suddenly got
better. “
Indeed, ShoreBank, even if saved now, is not guaranteed
anything beyond perhaps a short-term save from the regulators.
Initial estimates of ShoreBank’s shortfall had been in the $100
million range, but those numbers ballooned to $200 million. The
majority of the funds, $125 million would have to come from
private investors. The rest, $75 million, would come from TARP
funding.
Supporters of the bank claim that ShoreBank was not like
other banks that were dealing in subprime mortgages. However, the
bank did make a business of refinancing subprime mortgages
through its Rescue and Foreclosure Prevention loan program. In
fact, at one time the MacArthur Foundation provided grant funding
to underwrite the risk of those loan funds.
“It’s actually kind of awe-inspiring to see the effort
being expended on this bank,” says the head of a U.S.-based
bank’s Washington office. “You’ve had something like 70 or so
bank foreclosures, and you could argue that some of those were
better bets to recover than ShoreBank, but because of the
Clintons, the Obamas, the Moseley Brauns of the world, and
ShoreBank’s sentimental value because it supported their
community organizing efforts, it should be saved. None of them
were saying that about the bank in Wisconsin that kept
family-owned farms afloat. Wonder how those banks’ investors feel
about the Obama Administration’s lack of interest in
them.”
At press time, however, it appeared that the best efforts
to save ShoreBank had not panned out, though the FDIC had been
allowing ongoing discussions to continue.
