As his family’s Broadway Bank was failing, Illinois Democratic Senate candidate Alexi Giannoulias was meeting with White House officials, complains Rep. Darrell Issa, R-Calif., the ranking Republican on the House Oversight Committee. Issa now wonders whether Broadway might have received special treatment due to politics, and he has written FDIC Chairwoman Sheila Bair asking why Broadway Bank wasn’t taken over sooner.
The $394.3 million cost of taking over Broadway represents a loss of approximately 36 percent [of Broadway's assets] to the FDIC. The amount of the Broadway loss, both in dollars and as a percentage of total deposits, is significantly higher than those figures for the other six Illinois banks closed on April 23, 2010. These figures suggest that the FDIC may have waited longer than it should have to act to prevent foreseeable losses in the case of Broadway Bank.
Among the other six failures that day, only one cost the FDIC more than 30 percent of bank assets. Near the conclusion of the letter, he notes:
The Senate financial reform bill (the “Dodd bill”) would dramatically expand the authority of the FDIC. As Congress considers the Dodd bill, it is important that the FDIC provides an honest and transparent explanation of how it presently operates with respect to distressed banks so that we may fairly evaluate the Corporation’s capacity for additional responsibility.