from the Joel Pollak for U.S. Congress campaign
Evanston, IL-Today’s Wall Street Journal highlights Rep. Jan Schakowsky’s attempts to obtain $125 million to bail out ShoreBank. There have been 72 bank closures this year, including last week’s shutdown of Midwest Bank and Trust--yet Rep. Schakowsky has focused only on ShoreBank. She has approached the federal government, as well as Illinois state officials, playing the main role in propping up a bank that is not even in the 9th district.
ShoreBank spokesman Brian Berg told the Wall Street Journal: “White House officials have not met with ShoreBank regarding support measures for their bank.” Yet that does not answer the question of whether the bank is lobbying the White House through Rep. Schakowsky as an intermediary. Several White House figures--including adviser Valerie Jarrett and former “green jobs czar” Van Jones--also have ties to ShoreBank.
ShoreBank is failing because it did not operate like a normal bank. It was created in the wake of the Community Reinvestment Act (CRA), ostensibly to invest in low-income neighborhoods. Larger banks had CRA obligations, which they could meet by investing in community development (CD) banks. In fact, ShoreBank boasts that it “invented community development banking.” Because of the CRA, it was guaranteed money.
That meant that ShoreBank could take unreasonable risks, putting money into projects that might not produce a return, believing other banks had a social and legal obligation to bail it out. For example, ShoreBank created “environmental banking” and claims to be “America’s first ‘environmental bank.’” It also participates in “faith-based banking,” through which it lends to religious groups and non-profit community organizations.
However noble some of ShoreBank’s clients may have been--and some, like Jeremiah Wright’s Trinity United Church of Christ, were not--many of them were financially risky. Regardless, ShoreBank remained important for political reasons, providing money to groups aligned with “progressive” causes, and connecting a large number of high-profile politicians from both the Clinton and Obama administrations, who promoted it avidly.
Bailing out ShoreBank means bailing out a network of individuals and institutions that depend on what amounts to legalized extortion through the CRA. The real purpose of the bailout is to protect that network, not to help the poor. The extortion continues, as Rep. Schakowsky presses Wall Street banks for millions of dollars, while they face civil and possible criminal charges, and daily attacks from Rep. Schakowsky and her allies.
Like Alexi Giannoulias, who blames Mark Kirk for the failure of Broadway Bank, Rep. Schakowsky blames Wall Street for the failure of ShoreBank. But ShoreBank was set up to fail, with the expectation that Washington and Wall Street would bail it out. The real question is not whether Rep. Schakowsky will succeed in bailing out ShoreBank, but why she is so desperate to do so, and whom in particular she is so desperate to protect.
