ShoreBank bailout-turned-buyout raises alarms

FOR IMMEDIATE RELEASE

ShoreBank bailout-turned-buyout raises alarms

August 20, 2010

NILES, IL – As the work week winds to a close, it seems clear that federal regulators are about to seize ShoreBank. There will be no bailout of ShoreBank using taxpayer money.

That is a victory for our campaign, which led efforts to expose corruption at ShoreBank, and led protests against a bailout outside ShoreBank’s office in downtown Chicago.

At the same time, I am concerned about a reported plan to sell the bank’s good assets to ShoreBank’s current management, and give the bank a new name: Urban Partnership Bank. To use President Obama’s favorite analogy: that is like giving the car keys back to the same people who drove the car into the ditch.

It is important that people in low-income communities should continue to have access to capital. It is even more important that the people managing that capital be competent to do so. Why should poor people have to bear the risks of failed bank management?

The money for the management buyout comes from the big Wall Street banks whose arms were twisted by the Obama administration, through intermediaries like Rep. Jan Schakowsky (D-IL). Meanwhile, the government and the taxpayers are saddled with the responsibility of dispensing with ShoreBank’s bad assets. We are the victims of an insider deal, done at the highest levels of the administration and the Democratic Party.

The ShoreBank bailout-turned-buyout is a corrupt collusion between Washington and Wall Street that will not create jobs or investor confidence in Chicago’s low-income communities. It will sustain the terrible idea that poor communities must depend on patronage to survive.

The next Congress must launch a full investigation of the ShoreBank scandal, and uncover and punish the unfair insider deals that are destroying the basis of our free economy.

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