NRSC Continues to Hit Alexi Giannoulias for Banking Woes

From the NRSC, via the IL GOP:

Two Weeks of Silence: What is Alexi Giannoulias Hiding?

“In a statement, the bank said only 9 percent of the $242 million in nonperforming assets currently on its books originated under Mr. Giannoulias. But here is an inconvenient fact about bank failures: They do not happen overnight. A dollop of reckless lending here, a dash of destabilizing hot money there, hide a few troubles over there. Let that simmer for a while and, voila!, an insolvency soufflé.” – New York Times, “As Lender, Senate Candidate Impacted Bank Woes,” January 31, 2010

After promising to answer questions about Broadway Bank if he won the primary, today marks Alexi Giannoulias’ 14th day of silence. Despite pleas from his own campaign chairman, Senator Dick Durbin, to “come clean” about his role in the near-collapse of the bank, we still have no answers.

According to a Broadway Bank statement provided to the New York Times, only 9 percent of the $242 million in nonperforming assets currently on its books originated under Alexi Giannoulias. The only way to know if that’s true is for the Giannoulias family to release the list of nonperforming assets – complete with the dates, amounts and recipients of each loan or lease.

Reporters should ask Alexi Giannoulias if he and his family are willing to release the comprehensive list of $242 million in nonperforming assets currently on its books that led to the recent FDIC consent decree.

As the New York Times reported, Alexi played a direct role in creating the current crisis at Broadway Bank:

Construction-related lending jumped to more than triple the bank’s required regulatory capital during this period, and the loans started to go bad. By the time Mr. Giannoulias departed, Broadway was left with nearly $14 million in real estate on its books, more than 10 times the level when he arrived. Foreclosures take time, though — often about 18 months. And within two years of Mr. Giannoulias’s departure, the bank was left holding $38 million in real estate.

The move into real estate coincided with a headlong push into brokered deposits. This is quintessential hot money — large amounts that jump from bank to bank, each bank offering the lure of high interest , which the banks then must fund by making ever-riskier loans.

During Mr. Giannoulias’s time at the bank, brokered deposits catapulted fourfold, to $640 million. The typical bank at this point was growing brokered deposits at about 9 percent a year. Mr. Giannoulias’s bank was increasing its load by as much as 48 percent in a single year. Broadway Bank’s brokered deposits reached 80 percent of total deposits in 2006.

No one knows for certain how big a role Mr. Giannoulias played in these decisions. As Broadway’s top lending officer, he must have influenced the move into construction lending. As a connected family member, he was probably present during discussions of the hot-money play. Certainly, he took part in the family’s decision to take out some $70 million in dividends from the bank in 2007 and 2008, even as it careened toward a consent decree with the F.D.I.C.

Mr. Giannoulias told reporters that a time would come when he could answer questions about what happened at his family’s bank. Here is hoping there is plenty of time, because questions keep mounting faster than the troubles at Broadway Bank.

Two weeks and counting.

Learn more about Giannoulias’ record by visiting the NRSC’s new Web site