Crain’s Chicago Business reports that Alvin Boutte, Jr., the adviser who encouraged the state to invest in Democrats’ beloved ShoreBank as it was failing, has agreed to pay a fine, to have his securities license suspended, and to work under “heightened supervision” in the securities industry for the next year.

The ShoreBank scandal erupted in 2010 as Chicago Democrats, particularly Rep. Jan Schakowsky, tried to bail out the bank using any means necessary–whether federal, state, or private money. The bank’s closure was delayed several times–evidence, critics charged, of preferential treatment from the Obama administration.

Eventually, under pressure from the Tea Party and the media, a bailout was averted and federal regulators moved in.

Curiously, the bank’s management was permitted to buy ShoreBank’s serviceable assets and reconstitute the failed institution as Urban Partnership Bank, while taxpayers were obliged to carry the cost of dispensing with the rest.

Boutte’s involvement occurred during the tenure of former Illinois state treasurer Alexi Giannoulias, the Chicago Democrat and alleged “mob banker” who lost to Mark Kirk in the race for U.S. Senate in 2010, who was also blamed for losing hundreds of millions of dollars in parents’ tuition savings in a fund that invested in sub-prime mortgages. Boutte had donated to Giannoulias’s Senate campaign.

(more…)

Why is Rep. Jan Schakowsky trying to use Illinois taxpayers’ money to bail out ShoreBank?

Rep. Schakowsky and fellow Illinois Democrat, Sen. Dick Durbin, have pressured state officials to meet with the bank to discuss a $100 million bailout.

This would apparently be the first bank bailout by a state government–not just in Illinois, but in any state.

The reason ShoreBank is in trouble is quite simple: it made too many bad real estate loans, and fell below the capital requirements required by regulatory authorities.

Its political supporters point to its mission of helping borrowers in low-income communities. But ShoreBank is hardly the only struggling bank to serve those customers.

(more…)