Share this sShare this on Facebook(opens in new window)Share this on Twitter(opens in new windowAll sharing o
Former Illinois state Treasurer Alexi Giannoulias saw his political career derailed 11 years ago by the collapse of his family’s Broadway Bank, whose failure cost the Federal Deposit Insurance Corp. more than $383 million.
Now, Giannoulias, who’s trying to get back into politics with a run for Illinois secretary of state, has taken campaign money from four top officials of the Chicago bank.
Among them are his two brothers, who ran the bank, which federal regulators shut
down over losses that included more than $100 million in bad loans made to 17 failed commercial projects from New York to Los Angeles.
Giannoulias has accepted $24,000 in campaign contributions from the four former Broadway Bank officials, campaign finance records show.
He got $6,000 contributions Jan. 20 from each of his brothers — Demetris Giannoulias, who was president and chief executive officer of Broadway Bank when it failed, and George Giannoulias, who was chairman of the bank’s board of directors.
The same day, the former state treasurer got $6,000 contributions from two former bank board members — businessman Steven Dry, who was on the board when it was shut down, and real estate magnate Sean Conlon, who left the board more than a year before the bank failed.
He also got $6,000 contributions from Demetris Giannoulias’ wife and Dry’s wife.
Giannoulias’ brothers, Dry and Conlon were among nine Broadway Bank officials the FDIC sued, trying to recover the $100 million-plus the bank lent to the 17 failed commercial projects.
Without admitting any wrongdoing, those nine bank officials settled the FDIC lawsuit in November 2015, paying $5 million — a fraction of the losses authorities were trying to recover.
Broadway Bank’s collapse cost the FDIC’s insurance fund more than $383 million, according to an updated balance sheet filed in August by the independent agency that Congress created to insure bank deposits and “supervise financial institutions for safety, soundness and consumer protection.”
The agency is still trying to recover whatever money it can to offset Broadway Bank’s losses, a spokesman says, acknowledging that, 11 years after authorities shut down the bank, it’s unlikely to be able to do so.
Alexi Giannoulias, who’s one of four Democrats seeking to succeed retiring Secretary of State Jesse White in the June 28 primary, declined to be interviewed. In a written statement, he says, “Steve Dry and Sean Conlon . . . are personal friends of mine who believe in our campaign to modernize Illinois government.”
Broadway Bank was founded in 1978 by the Giannoulias brothers’ father, Alexis Giannoulias, a Greek immigrant. All three of his sons worked at the bank at some point.
Alexi Giannoulias, 45, who lives in Old Town, touted his experience as a vice president and senior loan officer for Broadway Bank when he ran for and was elected state treasurer in November 2006, months after his father died of a heart attack in Greece.
He was state treasurer and no longer working for his family’s bank when the Illinois Department of Financial and Professional Regulation ordered it closed on April 23, 2010, appointing the FDIC as the receiver.
After Barack Obama was elected president, Giannoulias ran against U.S. Rep. Mark Kirk, R-Illinois, for the U.S. Senate seat that Obama relinquished. During the campaign, Kirk repeatedly hammered Giannoulias over the bank’s collapse and his ties to the bank. Kirk defeated him in the November 2010 election to win Obama’s former Senate seat.
State and federal regulators had documented a series of problems at Broadway Bank starting in 2007, when bank examiners raised concerns about its focus on construction projects in New York, far from the bank’s headquarters in Edgewater. The examiners continued to question Broadway Bank’s lending practices, finding in February 2010 that it was “significantly undercapitalized,” according to the FDIC suit.
According to the FDIC, Broadway Bank didn’t take all the steps it could have to collect on the $100 million-plus in failed commercial loans.
For one of those loans, the bank’s board approved lending $22 million for a vacant site in Beverly Hills, California, where a condo project was planned. Conlon, who as a board member voted to approve the loan, was a major shareholder in a company that was part of the project, records show. The FDIC said the bank lost $3.4 million on the deal.
Asked about his recent contribution to Giannoulias’ campaign fund, Conlon says: “We’ve been friends for 20 years. If you can’t help your friends, who do you help?”
Giannoulias’ brothers and Dry couldn’t be reached.
In a campaign finance report, Alexi Giannoulias has reported that his campaign has gotten $2,746 in interest this year on its account at Spring Bank in New York City, which Demetris Giannoulias helped found.