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.
Photo credit: Associated Press
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.
The corrupt Shorebank bailout has pitted one faction of the left against another. On the one side are those like Geithner, who are starting to wake up to the grim economic reality that bailouts and corruption have imposed on our nation. On the other side are those like Schakowsky, who are determined to borrow, spend, and tax our nation into penury in order to chase their radical ideals and reward their political cronies.
The dividing line between the two factions is not based on ideology, but circumstance: those with actual responsibilities are the ones getting cold feet. Even Rep. Barney Frank (D-MA) was prepared to allow an investigation of ShoreBank and other bailouts into the financial regulation bill, until that amendment was killed in Senate negotiations at the last moment by those determined to cover up the role of the White House in the affair.
Schakowsky and other Chicago politicians who have lobbied for the ShoreBank bailout claim they are acting on behalf of a bank that serves needy communities. What they refuse to explain is why ShoreBank is the only community development bank they have campaigned and lobbied for, out of all the community development financial institutions in America that would be eligible for the $1 billion set aside within TARP for their benefit.
Schakowsky did not try to bail out Park National Bank, for example, which failed last year and had a distinguished record of addressing the needs of low-income customers. Nor has she tried to help banks in her own community, such as Bank of Lincolnwood, which was an iconic symbol in the 9th congressional district. This year alone, 11 banks have failed in Illinois, and 86 nationwide. None received the help ShoreBank is getting.
The Treasury is backing away from ShoreBank because of the mounting political and financial cost of supporting it. Schakowsky and other Illinois politicians are determined to save ShoreBank because of what might be revealed in an audit if it were allowed to fail. This is the classic pattern of failed hegemonic political movements, left or right: they fall apart not over differences of principle, but over the rapidly dwindling spoils of power.
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