Another political scandal is brewing in connection to the outrageous and controversial bailout of Chicago’s ShoreBank by Citigroup (NYSE:C), Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS) and GE Capital (NYSE:GE), where it’s thought so-called community bank with strong political connections, all the way up to Obama, is receiving bailout funds when they should have been forced to shutter like the hundreds of other banks taken over by the FDIC.
Even the banks offering the $140 million in new capital for ShoreBank say it won’t be nearly enough to deal with the issues it faces, and will need an additional $300 million to $400 million to survive over the long haul.
Federal Deposit Insurance Corp. chairman Sheila Bair is even backing this ridiculous circus of events, saying she’ll recommend to the Treasury that the application by ShoreBank to continue operations be accepted, even though it doesn’t meet the mandated guidelines to be allowed to continue operations. If I was a shareholder in any of these giant banks, I would start the lawsuits right away, as it’s definitely not in the interest of the shareholders to offer these loans, which are essentially illegal from the point of view of existing laws and banking requirements.
One media report asserts officials from the banks have been pressured to provide the loans, “officials at several of the banks that joined the consortium have complained that they received some political pressure to come up with the cash from people with ties to the Obama administration, including from Bair herself.”
The Chicago-raised Obama has given the bank high praise because they’ve loaned out money to low-income communities, as well as financing alleged environmentally friendly “green businesses.”
In other words, they’ve made terrible loans which are completely failing, but Obama and his cronies are going to completely disregard legal guidelines and save this bank in his city because they made loans they shouldn’t have.
To use the low-income argument is cynical and disingenuous. That also includes the environmental loans. All it reveals is that these types of loans shouldn’t be being made, as the results and failure of the bank reveal.
Why they use this terminology is to attempt to silence critics, as it makes them look like the bad guys to challenge what appears on the outside to be a supporter of the poor and defender of the environment. That can be manipulated by the administration and the mainstream media to make it look like those in opposition to bailing out this failed bank are against the poor and responsible environmental practices, when if fact what seems to be happening is the bank is making loans in a way a charity would give money to the poor.
Not only is something like this poor business practice, it is a misuse of deposits of those who have their money in the bank.
Thankfully, the ranking member of the House Financial Services Committee, Spencer Bachus, has launched an investigation into whether or not political pressure has resulted in this fiasco, and how far up the possible corruption goes.