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Alexi Giannoulias’ bid to take President Obama’s former seat in the U.S. Senate got a boost Thursday when a federal report concluded politics played no part in how the failure of his family-owned bank played out.
“Nothing came to our attention to suggest that FDIC officials or the FDIC examination, enforcement action, or closing processes were subject to any political or inappropriate influence,” said the report issued by the inspector general’s office of the Federal Deposit Insurance Corporation.
A leading Republican, Rep. Dan Issa of California, had asked the FDIC to investigate the April 23, 2010, closing of Broadway Bank in Chicago. Its failure ate up $394 million in FDIC insurance, which is paid from a fund that all banks pay into. Giannoulias was a vice president at the bank.
“The political circumstance and unusually high cost to the FDIC for a bank of its size necessitates answers from the FDIC about this takeover,” said Rep. Issa in a letter to FDIC Chairman Sheila Bair. “American depositors, who ultimately paid nearly $400 million for this collapse, deserve to know if closing the bank sooner would have cost less and, if so, why this did not occur and who benefited from the decision.”
He asked that the FDIC investigate pronto, so the results could come out before the November 2010 election, in which Giannoulias, a Democrat, is in a tight race with Republican Mark Kirk for the seat Obama gave up when elected president.
Broadway Bank’s closing was handled in a timely and appropriate fashion, the FDIC’s report Thursday said. “We concluded that delays in processing the examination and issuing the enforcement action resulted from the complexity and condition of Broadway, the increased regulatory workload from the rise in bank failures, and the need for coordination between the FDIC” and the Illinois agency that chartered the bank, the Illinois Department of Financial and Professional Regulation.
Because Broadway was a state-chartered, bank, the Illinois agency was responsible for closing it. The agency issued a letter that gave the bank 60 days to raise money or face closure; it shut the bank down 63 days later.
“We concluded that the FDIC’s resolution of Broadway was timely and ahead of the [FDIC’s] preferred 90-day closing time frame,” the report states.