While Barack Obama sharpens his populist attacks on banks he has been curiously silent on his hometown Broadway Bank which is owned by the family of Illinois State Treasurer Alexi Giannoulias who is a close personal friend of the President and running in next week's Democratic primary for his former Senate seat. Broadway Bank, which previously has faced criticism for loans to influence peddler Tony Rezko and reputed organized crime-linked figures, now is operating under "a consent order with banking regulators requiring it to raise tens of millions in capital, stop paying dividends to the family without regulatory approval, and hire an outside party to evaluate the bank's senior management" as reported by Steve Daniels for Crain's Chicago Business:
Established three decades ago as a lender to small businesses in Chicago, many of them Greek-owned, Broadway evolved into an aggressive commercial real estate lender, making development loans all over the U.S. and funded mainly by high-rate brokered deposits. When the real estate markets tanked, Broadway saw its loan quality deteriorate rapidly. * * * This is not the first time the bank has been a source of embarrassment for Alexi Giannoulias. Three years ago, bank loans to several organized crime figures came to light. The bank foreclosed on properties held by two of those borrowers last year.
Alexi Giannoulias was a vice president of Broadway Bank and its chief lender from 2002 to 2006, and his ties to the bank has provided fodder to his primary challengers including former federal prosecutor and Chicago inspector general David Hoffman as reported earlier this month by John Kass from the Chicago Tribune:
"The culture of corruption runs throughout Chicago's history, one hand washing the other," said Hoffman in an interview last week. "It's not about serving the public. But it is all about maintaining and controlling power." * * * The presumptive front-runner is Illinois Treasurer Alexi Giannoulias, a well-funded friend of President Barack Obama. But Hoffman perceives weakness there. He's going after Giannoulias' tenure as an official in the Giannoulias family Broadway Bank, and the bank's dealings with convicted influence peddler Tony Rezko. Rezko is scheduled to testify at former Gov. Dead Meat's corruption trial in June, before the general election. Rezko bounced a series of six-figure checks at Broadway Bank that he made out to casinos. The bank has come under fire for loans to convicted bookies and others. The national Republican Party will focus on these if Giannoulias wins the primary, Hoffman argues. "If I or you bounced a four-figure check or a five-figure check, as Tony Rezko did, my guess is our banks would say we are not interested in your business," Hoffman said. "I've been saying it, and I'm going to continue to say it. It's fair to scrutinize the record. I'm happy to have my record scrutinized. Everyone should."
In July 2009 Thomas A. Corfman for Crain's Chicago Business reported on some of Broadway Bank's troubled and troubling loans:
Broadway Bank is trying to recoup $12.9 million from two Chicago crime figures, rekindling a controversy as the bank's former chief loan officer, state Treasurer Alexi Giannoulias, gears up to run for the U.S. Senate. In recently filed foreclosure suits, the Giannoulias family-owned North Side bank alleges loan defaults by four companies whose owners include two convicted Chicago bookmakers — one also convicted of promoting a nationwide prostitution ring. Questions about Mr. Giannoulias' role in the loans surfaced in 2006, when he overcame concerns about his youth and inexperience to be elected treasurer. He defended the loans as sound business decisions, a claim undermined by the foreclosures. Now, at age 33, he could face similar questions, particularly if there are more disclosures about the relationship between the convicted felons and Broadway.
Corfman identifies the two convicted felons at issue as Michael Giorango who was "convicted in 1991 of federal bookmaking charges in Chicago" and also "convicted in 2004 in Miami of promoting a nationwide prostitution operation," and Demitri Stavropoulos "who was convicted in 2004 in Chicago of running a betting operation that grossed more than $3 million in about three years."