The Truth About Alexi

Truth

There is no cost to the government or taxpayers. The FDIC acts as an insurance fund for bank deposits. All banks pay in depending on the risk they pose. Taxpayer dollars are not used by the FDIC.

FDIC chairwoman Sheila Bair has publicly said that the fund has the necessary resources to weather the growing storm of bank failures.

Broadway Bank never applied for or received TARP money.

Truth

Alexi and his family have sustained a massive financial – not to mention personal - loss from the closing of Broadway Bank.

As his tax returns this year will make clear, Alexi has chosen not to elect the special “carry-back” provision that would entitle him to take a special tax refund on the bank’s loses.

Alexi believes that this provision was passed as part of the Recovery Act and is intended for businesses that are weathering the financial crisis and need the extra cash to keep their business afloat. Though it would be completely legal, Alexi does not think it's fair that he gets a special tax refund on the corporation's income now that there is no opportunity for him to reinvest it into the Bank.

The idea that Alexi will benefit in any way from the bank’s failure is absolutely false.

Truth

The claim that Alexi or his family “looted” the bank is an absolute lie.

For three decades, the Giannoulias family has reinvested nearly every dollar of profit back into Broadway Bank so that they could increase lending to their community. All dividends paid out were reviewed by state and federal regulators as a matter of course. The bank was extremely well capitalized at the time, with almost double the FDIC-recommended capitalization. Nearly all of the dividends paid out went to pay the Bank’s income taxes.

The remaining dividends were paid out as part of a standard estate planning process that was initiated because of the unforeseen passing of Alexi's father, Alexis Giannoulias. Alexi received $2.5 million in dividends in 2007 and 2008, and more than $1 million went to pay taxes.

Truth

When Alexi left the bank in 2006, it was incredibly profitable and capitalized at levels that were nearly double those recommended by the FDIC. While Alexi has taken his share of the responsibility, he has had no management or decision-making role at the bank since 2006 and only 9 percent of the non-performing assets were made during his time at the bank.

Small and mid-sized banks rely heavily on commercial real estate loans, which is why they are now bearing the brunt of the Wall Street collapse.

Like a lot of other banks, Broadway Bank was overexposed to commercial real estate. As it turned out, that market crashed in an unprecedented way. As Alexi discussed with the Tribune editorial board in March, the bank had capital levels that would have helped it weather a 20 or 30 percent fall in the real estate market. But very few banks were ready for a 40 percent fall. That’s why you’ve seen more than 200 community banks being taken over by the FDIC since 2008.

Large banks got bailed out by the taxpayer. Community banks were not. All the small and mid-sized banks are in this one together, and policy makers need to find a way to prevent this from happening again.

Truth

Small and mid-sized banks operate differently than large Wall Street firms. They are smaller and lack the large advertising budgets or storefront branches on every corner to attract depositors. In order to raise funds from which to lend, many small and mid-sized banks purchase brokered deposits, which are less expensive and more stable than other financial instruments. This is real money, not like some of the derivatives and other shady instruments that brought down Wall Street firms. Brokered deposits allow community banks to raise deposits efficiently and use that money to lend to small businesses.

Truth

The fact is that Tony Rezko was not a convicted felon, under indictment, or even under public suspicion, when he received loans from Broadway Bank. At that time, he was doing business and getting loans from several banks throughout Chicago, including Bank of Chicago, First Bank and Trust of Illinois, GE Capital, Harris Trust and Savings, LaSalle Bank, and Manufacturers Bank.

Broadway Bank refused to allow Rezko to cash checks when he had insufficient funds and also was the first bank to foreclose on Rezko for not paying a loan, forcing him into bankruptcy.

Mark Kirk is the only candidate in this race who accepted a donation from Tony Rezko; Alexi Giannoulias has never taken any donations from him.

Truth

There is absolutely no link between a handful of loans to certain individuals and the fate of Broadway Bank. Alexi has discussed these loans repeatedly. He has consistently said that if he knew then what he knows now, the bank would not have serviced the loans to these individuals. On numerous occasions since 2006, he has mentioned that most banks did not do criminal background checks on their loan applicants but rather lend based on credit worthiness, collateral and property valuation. Because of banking regulations that were strictly followed by the bank, all of these loans were legal and reviewed by state and federal regulators. Any suggestion that these few loans had any relationship to the bank’s financial problems is a lie.

Truth

Alexi has repeatedly been answering questions about the bank to the best of his knowledge. When he was sworn in as State Treasurer, he set strict divisions between himself and the bank so as to avoid even the appearance of preferential dealings. Both in his Treasurer and Senate campaigns, his opponents have tried and failed to make this an issue for voters.

As NBC reported in January, “…to his credit, Alexi Giannoulias has taken the questions, he has talked to reporters, and he has also said, he told us back in November he worried this day was coming.”

While Alexi has been answering questions and releasing his tax returns, Mark Kirk continues to refuse to release his personal tax returns.

And in March, he spent 10 hours talking to Chicago media and newspaper editorial boards about his father’s bank and his role at the bank.