CHICAGO NEWS BENCH: Broadway Bank Death Watch (Update #2)

APRIL 23, 2010 - Chicago -

Update #2 - It's All Over: Regulators Seize Broadway Bank, Will Reopen As MB Financial...

Update #1 - It was edge-of-your-seat drama. The media were camped out in front of the troubled Broadway Bank's branch at 5960 N. Broadway, waiting to see men in dark suits carrying little white boxes and legal papers.

Original Report: Will the bank owned by Alexi Giannoulias' family be shut down by federal regulators this afternoon? It seems so. Update: CBS 2 reports that customers are being told that the FDIC will assume control of the bank by the end of the day. CBS 2's Suzanne Le Mignot reports "customers are being told Broadway Bank will close after 6 p.m. Friday and will re-open Saturday under a new name. It was not immediately clear if another bank is in line to take control of the bank right away."

About three months ago, the feds gave Broadway Bank 90 days to straighten out their financial situation (they're nearly $90 million short of requirements). As the Chicago Sun-Times wrote today, "Time's up."

On WLS 890 AM this morning, talk show host Cisco Cotto did his entire 9:00-11:00 show from outside the bank's 900 West Van Buren Street branch. Roe Conn will broadcast the last hour of his WLS show today from that branch (5:00 to 6:00).

Late this morning, Chicago News Bench stopped by the branch on N. Broadway and chatted with crews from WGN TV 9 and Fox News Chicago. They talked to a few customers as they went into and out of the bank, but no officials came out to be interviewed.

All of the sun shades were pulled down on the large windows of the bank. I've passed by that bank a thousand times or more, and this was the first time I've ever seen those shades down. The employees are undoubtedly feeling a bit anxious and not eager to be photographed.

"If a bidder has not been found for the Giannoulias family's Broadway Bank, today could be the day federal and state regulators walk in and shut it down," wrote Abdon M. Pallasch, political reporter for the Sun-Times. "Nearly 90 days ago, the bank entered into a consent decree with government officials in which bank officials agreed to try to raise $85 million to recapitalize the bank."

Although the actual deadline is next Monday, nothing short of a last minute miracle or multi-bank merger agreement can save the bank. Typically, federal regulators shut down a bank at the end of business on Friday so as to minimize disruption to all concerned. Broadway Bank's normally closes at 6:00 p.m. on Fridays. It is possible that the regulators could give the bank still more time beyond Monday's 90-day limit. Nobody outside of the insiders knows at this time.

NBC Chicago is more pessimistic than the Sun-Times with their report today. Andrew Greiner reports, "A team of government-backed financial regulators is waiting to walk into the bank this evening after it closes, armed with computers, to shut down the failing institution's four branches unless the family miraculously comes up with $85 million to recapitalize it after losing a fortune on questionable real estate investments." Greiner goes on to say that an "11th hour rescue is not likely to happen."

Democrat Giannoulias is currently the Illinois State Treasurer and is running for U.S. Senate against incumbent "Republican" Mark Kirk. Giannoulias and Broadway Bank have faced harsh criticism for a couple of years now for loans made to criminals. John Ruberry at Marathon Pundit notes that, as State Treasurer, Giannoulias "mismanaged a college savings program, costing Illinois parents $70 million." John also has a ton of great links over there...

Depositors are protected up to $250,000 - in case you're one of those who has been under a rock and/or too confused to have taken your money out yet.