ShoreBank - the latest Bank failure - Obamas Crony capitalism

[BK]

ShoreBank just failed lot of President Obama Connections. ShoreBank has been granted lots of Tax Credit by Tim Geithner and the US Treasury. These Tax Credits allow Banks to attract investor money - because the Investor can often get a Tax break equal to approximately 40% of their Investment - even if the investment fails.

Guess who comes to the rescue of ShoreBank - a man named David Vitale - it turns out he's a neighbor of the Obama's in Chicago.

Check out the Investors that came to the rescue: "Bank of America Corp., American Express Co., Harris N.A., General Electric Co.’s equity investments arm, PNC Investment Corp., State Farm Insurance Cos., Wells Fargo & Co., Key Community Development Corp., Citigroup Inc., the Ford Foundation and the John D. and Catherine T. MacArthur Foundation"

These Investors are happy to continue get the benefits of a Bank that is sure to get more than its fair Share of Tax Credits - because Tax Credits are handed out at the Descretion of the US Treasury and Mr Geithner. Investing in a Bank headed by a Obama Chicago neighbor - you are bound to be treated more Equally than other Banks.

Truly Amazing times we live in?

http://www.chicagobusiness.com/artic...rtnership-bank

[don]

All Bank Failures Are Not Equal

Regulators Seize ShoreBank;


Management Takes Over

8 bit the dust yesterday. One received rather special treatment....

Regulators seized ShoreBank Corp. on Friday and agreed to sell assets to a team led by the community lender's executives and backed by several large U.S. financial firms.

The bank closure, among the 118 failures in the U.S. this year, caps months of uncertainty for a $2.16 billion Chicago bank that had ties to the Obama administration and deep roots on Chicago's South Side. The new institution will be known as Urban Partnership Bank and led by William Farrow, a former First Chicago Corp. executive who was ShoreBank's president and chief operating officer at the time of its failure.

The decision to sell to management is a rare move by the Federal Deposit Insurance Corp., which generally bars investors who own more than 10% of the failed bank from bidding on its assets. The FDIC also typically wants to know if bidders have "ever been an officer or director of a failed institution" and "participated in a material way in one or more transactions that caused a substantial loss to any such failed institution," according to an FDIC document.

The structure of the deal "is unusual," said Atlanta banking attorney Chip MacDonald.

The holding company will remain intact, according to a person familiar with the deal. Urban Partnership is backed by a consortium of large U.S. financial institutions, including Bank of AmericaCorp., Goldman Sachs Group Inc. and Morgan Stanley.

(WSJ)


from zerohedge....


After a lengthy attempt to bail out his pet bank, ShoreBank Chicago, Illinois, which included several alleged armtwisting episodes by the administration, the president has finally let the bank die (with its assets valued at about 50% of face). Yet instead of going to hell, it was immediately resurrected with a bevy of new owners, among them Goldman, Morgan Stanley, and BofA, all of whom received nearly $400 million in taxpayer money for their "generosity" to keep the bank zombified even in teh afterlife.

Some details on the bank from the FDIC press release: "As of June 30, 2010, ShoreBank had approximately $2.16 billion in total assets and $1.54 billion in total deposits." In other words, the value of ShoreBank's assets was well below 70% of face, if the bank was undercapitalized at its current deposit level. Continuing:

"The FDIC and Urban Partnership Bank entered into a loss-share transaction on $1.41 billion of ShoreBank's assets. Urban Partnership Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $367.7 million." Netting the incremental cost of taxpayer DIF subsidies, means that the real value of assets was ($1.54 billion - $367.7 million)/$2.16 billion or 54% of face. And this is a bank that Obama wanted to keep alive at all costs? And just who is this "Urban Partnership Bank" that is receiving a taxpayer subsidy of $368 million? Why all the usual suspects of course: "The significant investors in Urban Partnership Bank are American Express Company, Bank of America, Citigroup, Ford Foundation, GE Capital Equity Investments, Inc., Harris Bank, the John D. and Catherine T. MacArthur Foundation, JPMorgan Chase & Co., Key Community Development Corp., Morgan Stanley, Northern Trust Corporation, PNC Investment Corp., State Farm Mutual Automobile, The Goldman Sachs Group, Inc., and Wells Fargo & Company." And so the old "out-of-one-taxpayer-pocket-and-into-another-Wall-Street-pocket" game continues, only this time it includes administration darling banks that should have been liquidated long ago.
By keeping ShoreBank artificially alive for far longer than it deserved, the assets amortized far more than they would have had it been taken into receivership by a non-conflicted bank, and thus the final cost to taxpayers would have been far less.

As it stands, Goldman and 11 other banks are receiving a multimillion dollar gift to conduct a portfolio liquidation run-off of ShoreBank's assets, while merely making sure existing deposits are serviced. At least we now know just how truly angry at Wall Street Obama is.

The funniest bit: this is how efficient the auction process was (from the press release):

FDIC received only one bid, which included an asset discount of $146 million and a 0.5 percent deposit premium. This saved the FDIC’s insurance fund $250 million to $334 million over liquidation.

This also padded the top line of the abovementioned banks by $368 million off the bat, over and above whatever they make as they collect the proceeds from the portfolio run off.

In other words, Wall Street's core banks could have come up with any bid they wanted, and the FDIC would have had no choice but to fund the difference, because the alternative would be, gasp, so much scarier. Hm, where have we heard this before.

http://www.zerohedge.com/article/fai...rs-368-million

[don]

Re: ShoreBank - the latest Bank failure - Obamas Crony capitalism

Just posted same- can Fred correct?

[dummass]

Re: ShoreBank - the latest Bank failure - Obamas Crony capitalism

ShoreBank just failed lot of President Obama Connections. ShoreBank has been granted lots of Tax Credit by Tim Geithner and the US Treasury. These Tax Credits allow Banks to attract investor money - because the Investor can often get a Tax break equal to approximately 40% of their Investment - even if the investment fails.

Guess who comes to the rescue of ShoreBank - a man named David Vitale - it turns out he's a neighbor of the Obama's in Chicago.

Check out the Investors that came to the rescue: "Bank of America Corp., American Express Co., Harris N.A., General Electric Co.’s equity investments arm, PNC Investment Corp., State Farm Insurance Cos., Wells Fargo & Co., Key Community Development Corp., Citigroup Inc., the Ford Foundation and the John D. and Catherine T. MacArthur Foundation"

These Investors are happy to continue get the benefits of a Bank that is sure to get more than its fair Share of Tax Credits - because Tax Credits are handed out at the Descretion of the US Treasury and Mr Geithner. Investing in a Bank headed by a Obama Chicago neighbor - you are bound to be treated more Equally than other Banks.

Truly Amazing times we live in?

http://www.chicagobusiness.com/artic...rtnership-bank

Interesting, the article you linked to doesn't support your view at all. In fact, the Chicago Business article could easily mislead readers into thinking this bank is a charitable organization with the implied/stated goal of providing loans to minorities.

[dummass]

Re: All Bank Failures Are Not Equal

also posted by BK here:

http://www.itulip.com/forums/showthr...ony-capitalism

[don]

Re: All Bank Failures Are Not Equal

A simultaneous post! Maybe Fred can fix.

[BK]

Re: ShoreBank - the latest Bank failure - Obamas Crony capitalism

Perception is Reality - Most Voters financial sophistication/knowledge is on the level of at Fifth Grader.

ShoreBank sudsidiary also provides Financing for Van Jones Non-Profit Green for All through the use of Tax Credits. Learning about and figuring out all the Tax Credit schemes is dull/esoteric and makes for really boring articles. Why Do you think a Dolt like Timothy Geithner is continuing to head up the Treasury has our economy spins out of control - Tim is happy to do What ever the President wants - is main role is to Dole out Tax Credits to Political important Banks that can use the Tax Credits to Support President Obama Political Base and Advocacy Groups.

[chr5648]

Re: ShoreBank - the latest Bank failure - Obamas Crony capitalism

Perception is Reality - Most Voters financial sophistication/knowledge is on the level of at Fifth Grader.

Most voters base their decisions on anecdotal issues, such as gay marriage, gays in the military, etc. and issues that no matter what the sentiment will never be changed, such as abortion, it doesn't matter what the sentiment is the chances of abortion being banned are 0%.

Even if a 3rd or 4th party with legitimate issues and the intellectual capacity to govern were to campaign, the debate would quickly dissolve into anecdotal/value issues such as pro/con gay marriage, abortion, israel, etc. This issues in the grand scheme of things are irrelevant. The current mechanism makes sure that debates on real issues never happen.

[we_are_toast]

Re: ShoreBank - the latest Bank failure - Obamas Crony capitalism

Perception is Reality - Most Voters financial sophistication/knowledge is on the level of at Fifth Grader.

Possibly,

But maybe one reason for their lack of sophistication is when they are confused by the constant bombardment of a conspiracy behind every event.

ShoreBank sudsidiary also provides Financing for Van Jones Non-Profit Green for All through the use of Tax Credits. Learning about and figuring out all the Tax Credit schemes is dull/esoteric and makes for really boring articles. Why Do you think a Dolt like Timothy Geithner is continuing to head up the Treasury has our economy spins out of control - Tim is happy to do What ever the President wants - is main role is to Dole out Tax Credits to Political important Banks that can use the Tax Credits to Support President Obama Political Base and Advocacy Groups.

[BK]

Re: ShoreBank - the latest Bank failure - Obamas Crony capitalism

We are Toast,
I'm not a big conspiracy Theory guy.....I do believe that Smart Politicians have figured out how to use the System to by Pass Congress to get what they want.

You are aware the 'Tax Credits' are Big Business. Why Recapitalize a Bank like ShoreBank - under a new name - why not close it completely and move the assets to a Good Bank - this is the usual approach. Because ShoreBank is too important Politically - its a very valuable Political tool and the Banks who are investing are happy to have access to the Tax Credits.

[Slimprofits]

Re: ShoreBank - the latest Bank failure - Obamas Crony capitalism

http://www.foxbusiness.com/markets/2...tter-response/

But now the FDIC’s IG is looking at what, if any, improper political pressure was put on Wall Street executives in trying to bail out ShoreBank, and in funding the Urban Partnership Bank, which could mean big trouble not just for senior administration officials but also for Bair, since she was on the front line in trying to convince top banking executives to cough up the money for the bailout during summer.

The inspector general Jon T. Rymer, made his intentions known in a recent letter to Congressman Spencer Bachus, a Republican from Alabama and the ranking member of the House Financial Services Committee.

The letter, obtained by FOX Business, will examine among other things, “the nature of the FDIC involvement in the ShoreBank investor recapitalization effort,” and “determine whether there was any indication of political or inappropriate influence imposed on the FDIC.” Rymer, in an interview with FOX Business, said his office plans to question Bair about her role in the matter. “We will speak to her,” he said.

[Slimprofits]

Re: ShoreBank - the latest Bank failure - Obamas Crony capitalism

Perception is Reality - Most Voters financial sophistication/knowledge is on the level of at Fifth Grader.

ShoreBank sudsidiary also provides Financing for Van Jones Non-Profit Green for All through the use of Tax Credits. Learning about and figuring out all the Tax Credit schemes is dull/esoteric and makes for really boring articles. Why Do you think a Dolt like Timothy Geithner is continuing to head up the Treasury has our economy spins out of control - Tim is happy to do What ever the President wants - is main role is to Dole out Tax Credits to Political important Banks that can use the Tax Credits to Support President Obama Political Base and Advocacy Groups.

No, Geithner's main role is to cover up the very collapse of the financial system.

[BK]

Re: ShoreBank - the latest Bank failure - FDIC Order to Cease and Desist

Back in July of 2009 the FDIC had issued the following Order

http://www.fdic.gov/bank/individual/...2009-07-07.pdf

Classic politics - ignore the problem until it is really broken and can't be repaired. Then Print money to fix the broken institution.