Rezko’s pals reunite tomorrow at fundraiser 

Tomorrow, there will be a meeting between two guys who helped crooked developer Tony Rezko get his hands on millions of dollars.

Democrats Barack Obama and Alexi Giannoulias probably won’t talk about their old pal, convicted and now in federal custody, when they meet for tomorrow’s fundraiser to support Giannoulias’ campaign for U.S. Senate. But people who know about Obama’s career in Illinois politics will probably make the connection for themselves.

Rezko became Obama’s biggest donor early on because he was a developer of subsidized housing. He made his money from government. He needed Obama and others in government — including Rod Blagojevich, from the days he was a state representative, and some Republicans, too — to help him out.

As a State Senator, Obama was in a position to do a lot for Rezko, and he did. Rezko could count on Obama to promote the housing programs that made him rich: Rent subsidies, development subsidies, and policies that artificially increased demand for low-income subsidized housing. At one point, Obama also wrote a letter to Chicago and Illinois officials on Rezko’s behalf, urging them to give Rezko and a business partner (another Obama friend) a $14 million construction loan. The project in question wasn’t even in Obama’s state Senate  district.

The upshot: Rezko gave Obama a lot of money, and got a huge return on investment. He also pocketed millions in taxpayers’ cash and let his subsidized slums go to pot. He even turned off the heat during one cold Chicago winter, claiming inability to pay his bills. (Given the subsequent revelations about Rezko’s massive gambling problem, one can guess why.)

That’s not to say that Obama knew Rezko was a crook. It’s not to say Obama was aware of the appalling conditions of Rezko’s slums within his own district. But, as I put it in The Case Against Barack Obama, published two years ago today:

[W]hatever intentions he had, we know for sure that Obama helped cut Rezko and other developers in on millions of taxpayer funds, only to have them cash out and literally leave their tenants in the cold. The outrageous condition of Rezko’s buildings does not appear to have caused tension in their relationship. We also know that the developers returned the favor by giving Obama hundreds of thousands in campaign donations.

Giannoulias, meanwhile, once served as vice president of his family’s bank, Broadway, which collapsed because of its shaky business practices and the huge dividends it paid out after his father’s death. It had already been known that Broadway bank made loans to Rezko before his misdeeds attracted attention. But this week we learned about an additional $22.75 million loan the bank made to one of his companies in in February 2006.

This was well after Rezko had become radioactive, and despite the fact that another Rezko company had declared bankruptcy and defaulted on an earlier $10.9 million property loan from Broadway. (The bank did at least get its money back in foreclosure on that one.)

Giannoulias  had left Broadway five months before this loan was issued, to run for State Treasurer. But along with the earlier loans to felons and mobsters that Giannoulias actually did oversee, we get a pretty good idea of how Broadway Bank was run — a lot like state and local government is run in Illinois.

So tomorrow night: Barack Obama. Alexi Giannoulias. Piles of cash. Just like the good old days — if only Tony could be there.

About The Author

David Freddoso

Bio:
David Freddoso came to the Washington Examiner in June 2009, after serving for nearly two years as a Capitol Hill-based staff reporter for National Review Online. Before writing his New York Times bestselling book, The Case Against Barack Obama, he spent three years assisting Robert Novak, the legendary Washington... more
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