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.

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Excerpted from Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street. Published by Sentinel. Copyright Charles Gasparino, 2010.

But despite his trials, [Lloyd] Blankfein had taken time out of his grueling schedule to help a firm that wasn’t a Goldman client, not even a prospective one. The firm was ShoreBank Corporation, a small community bank located in Chicago that lent money to inner-city businesses and was exploring the possibility of financing nascent and as-yet-unprofitable “green” businesses through so-called conservation loans and environmental banking, according to the bank’s Web site.

The bank’s self-described mission was to “change the world.” And yet despite its seemingly good intentions, the bank’s urban commercial borrowers were suffering greatly from the lower property values and high unemployment that stemmed from post–financial crisis recession. Without Blankfein’s help (and the help of other
major Wall Street firms) ShoreBank would follow the fate of dozens of other banks during the great recession and face almost certain collapse and government liquidation.

To be sure, helping out a struggling bank that wasn’t even a client was a most un-Goldman-like thing to do. Goldman dealt with only the biggest companies in corporate America or with superwealthy individuals (typically, those with $10 million or more to invest with the firm). More thanthat, this was a firm that had a reputation for screwing just about any company, clients included, when business was on the line. Goldman, of course, would deny that assertion. Even so, in the normal course of business, a bank like ShoreBank, with its modest funds and do-gooder reputation, wouldn’t even appear on Goldman’s radar as a potential customer.

Yet for some seemingly inexplicable reason, Lloyd Blankfein—who had a net worth close to $500 million and until recently had never heard of ShoreBank—started imploring his friends at other firms, like Morgan Stanley, GE Capital, and others, to help this little bank. Not that Blankfein suggested there was money to be made here. Quite the contrary; it was simply the right thing to do.

To any casual observer, this puzzling scenario raises the question: Why would Blankfein possibly want to save ShoreBank?

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Fresh from lobbying for her friends at ShoreBank, Jan Schakowsky (D-IL) is at the center of another Chicago bank scandal–this time involving the remnants of a bank with connections to convicted former Illinois governor Rod Blagojevich, convicted fraudster Tony Rezko, and Barack Obama.

Under pressure from a contributor named Balvinder Singh (who gave her $500 in 2004, $2000 in 2006, and who knows what in 2010), Schakowsky twisted arms at the United Central Bank to back away from foreclosing on Singh and on several other business owners in Chicago’s West Rogers Park neighborhood.

United Central Bank took over the failed Mutual Bank of Harvey in 2009. According to Crain’s Chicago Business, Mutual funded Barack Obama’s “boneheaded” land deal with Rezko. Mutual’s former CEO also once raised major cash for Blagojevich.

The ghost of Mutual has returned to haunt Chicago politics, this time in a pay-to-play scheme that has unfolded barely a month before Election Day, with Schakowsky, the embattled incumbent, desperate and dishing out favors to survive.

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From The Hill:

ShoreBank, a Chicago-area community lender praised by Democrats, was taken over by the government Friday and its assets sold.

Chicago-area Democrats pushed hard for regulators to extend bailout money to the bank from the government’s $700 billion aid program. The bank was praised by President Clinton and numerous other lawmakers and industry players. The bank was started in the 1970s.

In a statement late Friday, the Federal Deposit Insurance Corporation (FDIC) said it had taken receivership of the failed bank. Urban Partnership Bank, also in Chicago, will take over the deposits and the 15 branches.

ShoreBank had roughly $2.2 billion in total assets and $1.5 billion in deposits, according to the FDIC.

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$2.5 million of federal stimulus money went to an energy firm in the Chicago area that used the grant to build a new heating system for the headquarters of Local 150 of the International Union of Operating Engineers, located in Chicago’s southwest suburbs.

The company, Indie Energy Systems Co., LLC, is located in Evanston, IL. According to Crain’s Chicago Business, it was previously a “stealth” company, relying on loans from ShoreBank and other investors to stay afloat. The $2.5 million stimulus grant brought Indie Energy out of the shadows, and into the world of big government. The money for the new heating system at the union HQ created “13.78” jobs, according to Recovery.gov, at an average cost of $181,422 per job–though it was supposed to “create and preserve 51 jobs,” according to the official description of the project.

The International Union of Operating Engineers is the biggest contributor to the re-election campaign of Rep. Jan Schakowsky (D-IL), giving the Political Action Committee maximum of $10,000 for the 2010 primary and general elections. Interestingly, the union gave its contribution in March 2009, shortly after the stimulus was passed last February. That suggests a quid-pro-quo could have occurred, with Indie Energy used as the conduit.

[UPDATE: Local 150 makes its political contribution decisions independently of the national organization’s Political Action Committee, to which Local 150 also contributes.]

Yesterday, Schakowsky visited another Indie Energy project, this one located on the Evanston campus of Northwestern University. She touted the company as “an innovative small business that can help grow our country’s evolving clean energy economy.” She neglected to mention its connection to the union heating project, its links to ShoreBank, or its heavy reliance on federal stimulus funds. Nor did she explain how the benefit of $2.5 million in federal funds found its way to her biggest contributor.

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Certainly the philosophy of the Triple Bottom Line (“3BL” or “TBL”) is unconventional when compared with accepted business practices which are based upon the typical single bottom line of profit. We know that profit is essential to business survival, but we should ask how this expanded 3BL business model gained traction. For an answer, we need to look at the history of 3BL, and that history shows us that environmental and social idealism have been closely linked since the modern global environmental movement began in 1972.

In 1972, Maurice Strong, a patriarch of the global environmental movement who now sits on the board of directors for the Chicago Climate Exchange, led the United Nations Conference on the Human Environment, which met in Stockholm and released a declaration linking the human exerience to nature. It acknowledged that “man is both creature and moulder of his environment” and has advanced to the point where he has the power to significantly affect nature and, by extension, his own intellectual, moral, social and spiritual growth. The global social ramifications of man’s environmental stewardship are thus clearly stated in the Stockholm declaration:

The protection and improvement of the human environment is a major issue which affects the wellbeing of peoples and economic development throughout the world; it is the urgent desire of the peoples of the whole world and the duty of all Governments.

The UN felt the environment and social well being were so linked that the declaration’s first Principle focused on it:

Man has the fundamental right to freedom, equality and adequate conditions of life, in an environment of a quality that permits a life of dignity and well-being, and he bears a solemn responsibility to protect and improve the environment for present and future generations. In this respect, policies promoting or perpetuating apartheid, racial segregation, discrimination, colonial and other forms of oppression and foreign domination stand condemned and must be eliminated.

Without question, the UN has made a particular commitment to social and environmental ideology since the very beginning of the green movement, and in the Stockholm declaration we can see much of the framework for global socio-environmental ideology already in place.

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The story of ShoreBank has caught national attention, as this relatively small, so-called ”community development bank” has been the target for bailout assistance via state and federal taxpayer money. In the past, particular banks have received assistance if they were deemed “too large to fail,” on the presumption is that if they did fail, they would take the banking industry — and possibly the economy itself — with them. ShoreBank, however, is a special case, and the favoritism shown it is based more on its banking philosphy than its size. What is it about ShoreBank’s philosophy that has garnered the favor of those who apparently see it not as “too large” to fail, but too important to fail? To answer that, we will be exploring the concept of the “Triple Bottom Line” (TBL or 3BL), which is the most succinct statement of Shorebank’s mission and purpose. In this series of articles we will discuss what the triple bottom line is, where it came from, and where it is leading us. We will see just how important 3BL philosophy is to those who subscribe to it and why they must protect its champion, ShoreBank, at all costs. As we explore it, we will see how it is more than just a new business model, but an maturing philosophy that begs protection from stakeholders whose goal is to establish it as a societal norm. Indeed, as we shall see, the Triple Bottom Line represents a philosophy which has been deemed “too important to fail.”

What is the Triple Bottom Line?

The Triple Bottom Line (TBL or 3BL) is the most succinct statement of Shorebank’s mission and purpose, and the bank proudly touts its commitment to the 3BL objectives. What are these objectives? Essentially, they are an organizational commitment to social and environmental concerns in addition to economic concerns (profit). Shorebank’s website summarizes it as follows:

Most businesses have a single bottom line – maximizing shareholder return. “Triple bottom line” companies typically manage to achieve three returns: profitability, social return and an environmental return. ShoreBank describes its triple bottom line as profitability, community development impact and conservation.

ShoreBank claims that pursuing profit alone is inadequate for businesses today, and therefore it feels traditional accounting measures must now also incorporate the goals of social welfare and environmental responsibility as well.

How is the Triple Bottom Line Practiced?

The vision behind 3BL is praiseworthy, as responsible and upstanding companies will by necessity conduct their business in ways friendly to their employees, customers, and community — as well as protect and preserve their environmental resources. However, how does 3BL actually work in practice? Is it a feasible and practical business model that accomplishes its stated goals? Let’s look again at ShoreBank’s website for the explanation. ShoreBank explains that it invests and loans money to foster community development and environmentally friendly projects. Then it attempts a description of how it codifies its progress towards fulfilling its 3BL aims:

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As the Central Illinois 9/12 Project has briefly written about in the past, one form of banking in which Shorebank is engaged is microfinance, especially in foreign countries. As this is not a type of finance that is well known to the general public, we will discuss briefly what microfinancing is, how it is used in conjunction with green initiatives and Sharia law, and how Shorebank is using this type of financing in their banking processes.

The Consultive Group to Assist the Poor (CGAP) defines microfinance as simply “the  supply of loans, savings, and other basic financial services to the poor.”  These loans are generally relatively small, but carry with them a high interest rate due to costs incurred by defaulting on loans and the transaction costs that are disproportionate to the size of the loan.  (The cost of manpower and other factors needed to make the loan are the same regardless of the size of the loan – thus for smaller loans, the  percentage of these costs in relation to the amount of the loan is greater.)  Specifically, the microfinancing industry enables people to receive loans when they would not otherwise be able to do so, whether due to poverty, lack of a bank account, inability to provide collateral, and/or inability to prove employment. In 2007, there were 873 microfinance institutions worldwide serving more than 133 million loan recipients.

Microfinance was initially, and oftentimes still is, aimed at providing loans and opportunities to those who otherwise may not have the funds to get a business off of the ground, but microfinance is sometimes tied into other things such as green initiatives. Shorebank, a community development bank whose practices the Central Illinois 912 Project has highlighted before, is a partner in an eco entrepreneurship through a project called “Yurtcozy.” This initiative allows individuals to “offset their carbon footprint” by buying carbon credits which enable a microfinance loan recipient to receive funding  for things such as energy efficient appliances and solar lighting. It may also finance education on clean energy for microfianance recipients and partnerships in green initiatives. Yurtcozy asserts that if the carbon credit purchases were made for all microfinance loan recipients worldwide, then loan recipients could decrease their carbon emissions by 260 million tons, and thirty percent of their income would be unlocked.

One of Shorebank’s first forays into microfinance was through the establishment of Grameen Bank in Bangladesh in 1983. Grameen Bank was founded by Mohammed Yumus, a Noble Peace Prize Recipient in 2006 and 2009 recipient of the Congressional Medal of Freedom from President Obama. Yumus’ description of the features of Grameencredit includes stating that “credit is a right,” and it’s built on “trust” (i.e., social justice in banking.)

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In the wake of recent reports that Shorebank’s financial status worsened in the second quarter, some interesting new developments have surfaced.

Yesterday afternoon, Fox Business News reported that Shorebank will now be the target of a federal investigation, to look into whether political pressure was exerted on Wall Street banks to give money to help the troubled Chicago community lending bank reach the monetary threshold needed to allow the bank to qualify for federal TARP funds.

Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program (TARP), has said that he will begin looking into whether or not top-level political operatives (e.g., Eugene Ludwig, former comptroller of the currency under President Bill Clinton) and FDIC chief Sheila Bair were involved in exerting direct pressure to force Wall Street banks such as JP Morgan Chase, Goldman Sachs, and others to give money (which now totals more than $150 million) to the ailing bank.  Interestingly enough, Shorebank has been involved in raising private capital to qualify for TARP funds despite the fact that Shorebank senior vice president Michelle Collins emphatically stated just last year that Shorebank would take “no TARP money.”

Although the Obama administration has officially denied any involvement in helping to prop up Shorebank, the rush by other banks to come to its aid has been nothing short of remarkable.  More than a few eyebrows have been raised in response to the general flurry of activity shown by other, larger banks seeking to involve themselves in helping to rescue Shorebank.

For example, Lloyd Blankfein, Goldman Sach’s chief executive, was personally involved in making phone calls to encourage other Wall Street banks to inject capital into the the failing Shorebank.  This, in a stated effort to allow Goldman Sachs to fulfill its obligations under the 1977 Community Reinvestment Act.  (Interestingly, Ron Grzywinski, one of the founders of Shorebank, was the only banker to testify before Congress in favor of the Community Reinvestment Act.)

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The Central Illinois 9/12 Project became the first to expose — beginning this past March on BigGovernment.com – Shorebank’s extensive green and microfinancing agendas, in anticipation of that bank’s impending bailout.  Shorebank, a Chicago-based, community investment bank, is focused on domestic and foreign microfinancing, is heavily engaged in the financing of “green” projects and “green” jobs, and has a host of ties to the Obama and Clinton administrations. The Central Illinois 9/12 Project has most recently highlighted the bank seeking and obtaining funds from larger banks–such as Chase, Banks of America, and Goldman Sachs — to secure the necessary funding to remain viable.

The fact that Shorebank had the opportunity to be rescued while other banks were allowed to fail proved to be curious to Illinois residents, and for a time it was unknown if the bank would receive enough funds from private entities to qualify for a federally-funded bailout. Such curious treatment sent up a red flag for some Congressional members and thus influenced the formation of the financial reform bill.  Through an amendment offered by Congresswoman Judy Biggert and Congressman Spencer Bachus, the House Financial Committee voted to approve inquiries into the negotiations between the White House and any bank that had been ordered to cease engaging in unsound banking practice, via an amendment to the House finance reform bill in late June.

The Central Illinois 912 Project has learned from an assistant for Biggert that Biggert’s office sent a letter to the White House regarding this probe, but the White House denied receiving that initial letter. Biggert’s office sent a second letter which the White House acknowledged receiving; however, the White House has never responded to it.  This probe would not only have been for Shorebank, but for all other banks that have received bailout funds since June 2009 — and it would have prevented those banks from receiving any TARP funding while under investigation. Potentially, if the bill was passed and signed into law and the probe was started within the given amount of time, Shorebank would have folded without the needed TARP funds to match the private sector’s matching funds (i.e., funds from larger banks).   However, when this bill was passed by the House, the amendment was removed by Senate negotiators.

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As the August 6th bailout deadline approaches, when the federal government must either give ShoreBank $75 million or take it over entirely, new evidence is emerging about ShoreBank’s connections to Chicago politicians.

The latest revelations raise new questions about the possible role of Illinois State Treasurer Alexi Giannoulias, who is also the Democratic nominee for U.S. Senate in the upcoming November election.

Shortly after Giannoulias took office in 2007, the Illinois Student Assistance Commission (ISAC), a state-run college fund, invested $12.7 million in ShoreBank. Some of ISAC’s funds came from parents who invested in Bright Start, a program to help them save for their children’s college tuition.

As of this week, according to Crain’s Chicago Business, ISAC’s ShoreBank stake has lost over 80% of its value–which not even a bailout will restore.

The $12.7 million investment was ISAC’s “first and only direct investment in a privately held company,” according to Daniels. Furthermore, ISAC’s investment made the tuition program the single largest shareholder in ShoreBank.

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For months, we have been told that ShoreBank deserves a bailout because it serves poor communities. We have been assured by ShoreBank’s patrons, such as Rep. Jan Schakowsky (D-IL), that allowing the federal government to take over the bank will put borrowers in those communities at risk.

Now, as the truth has begun to emerge, it is becoming clear that ShoreBank’s troubles did not begin in poor communities at all.

Robin Sidel of the Wall Street Journal reports that ShoreBank’s financial problems may partly stem from loans made to condominium developers and builders in parts of town beyond its traditional focus on the city’s South Side.

If ShoreBank deserves help because it is the “iconic community development bank,” as Schakowsky recently claimed, what was it doing lending money to condo kings, and why should taxpayers bail it out?

If the ShoreBank is taken over, Schakowsky claims, “the losers will be these low-income communities and the businesses and the homeowners that they serve.”

That was never true.
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The Hill revealed yesterday that Rep. Jan Schakowsky (D-IL) and three other Chicago Democrats have written a letter to Secretary of the Treasury Tim Geithner, asking him to release $70 million in federal TARP funds to bail out ShoreBank. ShoreBank’s political patrons have made Geithner their number one target, ever since the Treasury balked on supporting one of the most brazenly corrupt bailouts of the past several years.

Bill Brandt, chairman of the Illinois Finance Authority (IFA), launched the first attack last month: “It’s now clearer than ever to me that while [Geithner]’s happy to have these people clean his apartment and those of his cronies on Wall Street, he’s not comfortable with them getting mortgages for their homes.” Ironically, the IFA itself declined to bail out ShoreBank when Schakowsky’s overtures to the State of Illinois were exposed. (more…)

Late last week, at the 11th hour, the Senate removed an amendment that would have required the inspector general of the Federal Deposit Insurance Corporation to investigate the corrupt ShoreBank bailout, as well as every other bailout since January 2009. It is the clearest sign yet that the White House and Democrats in Congress are covering up the truth. If there is nothing to hide, why block the ShoreBank investigation?

Even Rep. Barney Frank had publicly given his support to a ShoreBank probe. The bank claimed an investigation would delay the arrival of funds needed to keep it afloat. Yet Frank made sure that none of the banks being investigated would have had their federal assistance suspended (as the amendment originally provided). So there was no chance that ShoreBank’s bailout–if it were to be approved–would have been stalled.

Lynn Sweet of the Chicago Sun-Times–who is close to Rep. Jan Schakowsky (D-IL), the main political sponsor of the ShoreBank bailout–asks: “What exactly does Chicago’s ShoreBank have to do to survive?” But the real question she and other journalists must ask–and would ask, if this were any other bank–is: “What exactly are Democrats trying to hide?” If this Congress won’t investigate corruption, we ought to elect one that will.

The House Financial Services Committee voted Wednesday to launch an investigation of the ShoreBank bailout, a scandal that was first revealed here at BigGovernment.com. Of the dozens of banks that have failed this year, only ShoreBank received help from Washington and Wall Street. The reasons: its connections to the White House, its close relationship with Rep. Jan Schakowsky (D-IL), and its importance to the radical left.

After I broke the story in January, other bloggers, notably the Central Illinois 9/12 project, connected more of the dots. Soon, the Wall Street Journal, the Chicago Tribune, and even the New York Times began following the story. Two weeks ago, my campaign joined Rev. Isaac Hayes (who is challenging Jesse Jackson, Jr. in IL-2) and the Illinois Tea Party in a spirited protest outside ShoreBank’s offices on LaSalle Street in downtown Chicago.

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ShoreBank’s connections to the White House and Capitol Hill, as well as to the green jobs movement, have been documented here at BigGovernment.com. Yesterday, Angela Caputo of Chicago Now revealed that the “community development” bank became a predatory lender in African-American and Hispanic communities when it ran short of cash.

New video evidence (after the jump) reveals that Rep. Jan Schakowsky promoted ShoreBank to consumers in January 2010, even as she was trying to get taxpayers to bail it out.

And the recent mob protests of the SEIU, also exposed at BigGovernment.com, illuminate another aspect of the scandal: the use of intimidation and even illegal tactics to force Americans to comply with the corrupt self-dealing of the Obama administration–before it even took office.

SEIU rallies workers at illegal Republic Windows strike, Dec. 2008

ShoreBank is about to receive $75 million in federal taxpayers’ money for a bailout that has become the prime example of “crony socialism” under the Obama administration. It is not the first federal money ShoreBank has received. In May 2009, it was awarded $35 million in stimulus credits for “green projects” in Chicago, Detroit, and Cleveland. The grant was part of Van Jones’s “green jobs” push, with a focus on home weatherization.

President Barack Obama was so enthusiastic about weatherization that he made it the centerpiece of his jobs program, prompting a nonplussed Jon Stewart to comment on the Daily Show: “These ideas sound like the people we got tired of.” President Obama and Vice-President Joe Biden praised one company in particular, Serious Materials, which was the only “green” window company to receive tax credits in the stimulus bill.

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I have found evidence that may explain the intense interest of Rep. Jan Schakowsky (D-IL) in bailing out ShoreBank, the “community development” bank that has received extraordinary assistance from her and several other “friends in high places.”

The New York Times confirms that Rep. Schakowsky played a leading role in the ShoreBank bailout. Yet ShoreBank is not based in Rep. Schakowsky’s congressional district, and she did not help the Bank of Lincolnwood–which is in her district, and failed in 2009–or Park National Bank, which was also active in community development in Chicago until it was closed by federal regulators last year.

Now, court documents that I have obtained reveal that ShoreBank was one of several banks that Rep. Schakowsky’s husband, Robert Creamer, used in the check kiting scheme for which he was convicted and sentenced to federal prison in 2006.

31925793-Defendant-brief-Sentencing-March-21-2006

When another bank, Cole Taylor Bank, refused to continue honoring his checks, Creamer turned to ShoreBank for help. ShoreBank evidently provided him with extra time to find over $1.4 million to cover the overdrafts.

As Creamer wrote to the U.S. Probation Officer prior to sentencing: “When I learned that Cole Taylor would no longer pay on uncollected funds, I immediately contacted South Shore Bank (now ShoreBank)–the bank most likely to incur an overdraft…”.

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The Central Illinois 9/12 Project became one of the first to expose — beginning this past March on BigGovernment.com – Shorebank’s extensive green and microfinancing agendas, in anticipation of that bank’s impending bailout.  Shorebank, a Chicago-based, community-based investment bank, is focused on domestic and foreign microfinancing, is heavily engaged in the financing of “green” projects and “green” jobs, and has a host of ties to the Obama and Clinton administrations.  Most recently, we wrote in April about Shorebank seeking a “bailout” from larger financial firms that have previously received bailout money from the federal government. Congresswoman Jan Schakowsky had previously proposed that the bank receive funds from the State of Illinois to help cover its loss of capital since the beginning of the nation’s economic downturn in 2008.

As we previously wrote, Shorebank would potentially be eligible for TARP funds if it were to be recognized as a “Community Development Financial Institution.” In order to to received needed federal TARP money and prevent seizure by the FDIC, Shorebank needed to receive appropriate matching funds from private sources.  News stories have been released over the past several days indicating that Shorebank has potentially received such funding.

Shorebank has reportedly received $20 million from General Electric, $20 million from Goldman Sachs, and $20 million from Citigroup – with additional large funds being promised by J.P.Morgan Chase, Bank of America, and Morgan Stanley. Shorebank also has received funds from the Northern Trust Corporation, State Farm, and Harris N.A.  It has been reported that the bank could also receive funds from Wells-Fargo and PNC Financial Services.  Assistance from these financial institutions puts Shorebank’s raised capital from private sources within the range needed to make it eligible for TARP funds.

As we reported previously, Citigroup, Bank of America, and Chase all received tens of billions of dollars in taxpayer money from TARP.  Does this then mean that Shorebank is being bailed out by bailout money?

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Today it was reported that Goldman Sachs CEO Lloyd Blankfein has been calling Wall Street friends to cough up $125 million to save ShoreBank, which faces federal closure next week. Rep. Jan Schakowsky suggested in January that Illinois taxpayers foot the bill. That would have been the first state-led bank bailout in U.S history. The idea was abandoned–so it appears the government is shaking down Goldman Sachs instead.

ShoreBank has close connections to the Obama administration, including controversial figures such as former “green jobs czar” Van Jones. Its executives have contributed in the past to Rep. Schakowsky and other Illinois politicians. ShoreBank did not just make loans in poor communities–there are other local banks that do that without getting into trouble–but also specifically made loans that the recipients had little hope of repaying.

Now ShoreBank is calling in some political favors, and the politicians are responding with a classic Chicago-style shakedown. It is probably no coincidence that Goldman Sachs suddenly took an interest in ShoreBank after it was slapped with a federal civil fraud lawsuit and a criminal investigation. Many Wall Street observers believe that the charges against Goldman Sachs were politically motivated, in timing if not in substance.

Regardless, Mr. Blankfein got the message, telling Goldman Sachs shareholders last week that he would try to rebuild the company’s image. He called up other bailed-out institutions that are being threatened with federal charges–Bank of America, Citigroup, and JP Morgan Chase–and got them to cough up millions for ShoreBank. So although the ShoreBank bailout is “private,” American taxpayers are still indirectly on the hook.

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As the Central Illinois 912 Project has addressed previously on BigGovernment.com, Shorebank is a community bank based out of Chicago that is engaged in microfinancing – a hybrid of capitalism and social justice.  They have been supported and promoted by individuals like Van Jones, President Obama, President Clinton, and Secretary Clinton. They have also become heavily involved in the financing of green projects (see here and here).

In 2009, Shorebank received more than $35 million in federal funds for grants and new market tax credits. Despite this new flow of funds to extend to their customers and loan recipients, Shorebank reported a loss of $50 million in 2009 alone and was issued a “cease and desist” order by the FDIC and the Illinois Department of Financial and Professional Regulation.  In addition, ShoreBank was receiving strong warnings from the Federal Reserve Bank of Chicago. Their dire financial state had lead them to initially seek a “bailout” from the State of Illinois, promoted by Chicago Congresswoman Jan Shakowsky and Senator Dick Durbin. However, they have since decided that they can find capital without seeking state help.

Interestingly, Shorebank is currently seeking support from a few large banks –all of which have received federal bailout money from the Toxic Asset Relief Program (TARP) and are Shorebank stockholders. These banks include Citigroup, Bank of America, and Chase. Citigroup initially received $25 billion in taxpayer money (plus another $20 billion soon after), and Bank of America initially received $15 billion (plus another $20 billion after that). Neither of these banks has completely paid back their TARP loan. Chase also received $25 billion in bailout funds, but repaid its loan in December of 2009. So rather than seeking a bailout from a state that has a $13 billion budget deficit, Shorebank is seeking to be bailed out by banks that have already been bailed out by federal taxpayers – which is, in essence, an indirect, federally-funded bailout.

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