Broadway Bank (Illinois)
Encyclopedia
Broadway Bank was a Chicago
bank
that existed from 1979 to 2010, and was owned by the Giannoulias family. Its financial situation and history of questionable loans are a factor in the campaign of Alexi Giannoulias
in the 2010 U.S. Senate election in Illinois.
It was founded in by Alexis Giannoulias, a Greek immigrant. His sons, Demetris Giannoulias and Alexi Giannoulias
, were also heavily involved in the bank. Demetris eventually became a senior officer, and Alexi was a vice president and senior loan officer from 2002 to 2006. By 2010, Demetris was CEO
.
; the building was both her home and the Museum of Holography, which she had founded in the 1970s. In 2006, her son sued the bank, claiming that she had dementia
; the bank won the suit in Cook County court in 2008 but, , the case was being pursued by the son in appellate court.
Among people with bank accounts at Broadway were Barack Obama
, Illinois Secretary of State Jesse White
, and Chicago alderman Walter Burnett, Jr.
In 2006, Broadway Bank was considered very successful, and less than 0.5% of its loan portfolio was 90 days overdue.
Alexi Giannoulias left Broadway Bank in 2006 when he was elected Illinois State Treasurer
. While state treasurer, he won the Democratic primary in the 2010 U.S. Senate election in Illinois, making him the Democratic candidate for Barack Obama's former U.S. Senate seat.
Kaushik Pancholi, noting that Broadway has previously "been one of the most profitable banks in Illinois", noted "certain investments that were rated triple-A by rating agencies when purchased, but have lost significant value over the past year."
At the end of business on Friday, , the Illinois Department of Financial and Professional Regulation
, Division of Banking, seized Broadway Bank and appointed the Federal Deposit Insurance Corporation
(FDIC) as receiver
. The FDIC in turn named MB Financial Bank as the institution receiving Broadway Bank's deposit accounts. The FDIC announced that it and MB Financial Bank would share $878.4 million in losses, for a cost of $394.3 million to the federal Deposit Insurance Fund
. Broadway Bank was one of seven Illinois banks that were closed on the same day; the others were Chicago banks Citizens Bank & Trust Co., Lincoln Park Savings Bank, and New Century Bank; Amcore Bank in Rockford
; and Peotone Bank and Trust Co.
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
that existed from 1979 to 2010, and was owned by the Giannoulias family. Its financial situation and history of questionable loans are a factor in the campaign of Alexi Giannoulias
Alexi Giannoulias
Alexander "Alexi" Giannoulias is an American politician who served as Illinois Treasurer from 2007 to 2011. A Democrat, Giannoulias defeated Republican candidate State Senator Christine Radogno in November 2006 with 54 percent of the vote, becoming the first Democrat to hold the office in 12...
in the 2010 U.S. Senate election in Illinois.
It was founded in by Alexis Giannoulias, a Greek immigrant. His sons, Demetris Giannoulias and Alexi Giannoulias
Alexi Giannoulias
Alexander "Alexi" Giannoulias is an American politician who served as Illinois Treasurer from 2007 to 2011. A Democrat, Giannoulias defeated Republican candidate State Senator Christine Radogno in November 2006 with 54 percent of the vote, becoming the first Democrat to hold the office in 12...
, were also heavily involved in the bank. Demetris eventually became a senior officer, and Alexi was a vice president and senior loan officer from 2002 to 2006. By 2010, Demetris was CEO
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
.
21st century
In 2002, Broadway Bank also made a one million dollar loan to Loren Billings, using her building on West Washington Street in Chicago as collateralCollateral (finance)
In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.The collateral serves as protection for a lender against a borrower's default - that is, any borrower failing to pay the principal and interest under the terms of a loan obligation...
; the building was both her home and the Museum of Holography, which she had founded in the 1970s. In 2006, her son sued the bank, claiming that she had dementia
Dementia
Dementia is a serious loss of cognitive ability in a previously unimpaired person, beyond what might be expected from normal aging...
; the bank won the suit in Cook County court in 2008 but, , the case was being pursued by the son in appellate court.
Among people with bank accounts at Broadway were Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
, Illinois Secretary of State Jesse White
Jesse White (politician)
Jesse Clark White is a Democratic American politician. He is currently the 37th and second-longest serving Secretary of State of Illinois, after James A. Rose, and the first African American to hold this position....
, and Chicago alderman Walter Burnett, Jr.
Walter Burnett, Jr.
Walter Burnett, Jr. is alderman of the 27th Ward of the City of Chicago. He was first elected in 1995.- Early life :Burnett grew up in the Cabrini–Green public housing project, in Chicago. Burnett served two years in jail for bank robbery, when he was 17. Burnett attended Harold Washington College...
In 2006, Broadway Bank was considered very successful, and less than 0.5% of its loan portfolio was 90 days overdue.
Alexi Giannoulias left Broadway Bank in 2006 when he was elected Illinois State Treasurer
Illinois State Treasurer
The Treasurer of Illinois is an elected official of the U.S. state of Illinois. The office was created by the Constitution of Illinois.-Current occupant and duties:, the Treasurer of Illinois is Dan Rutherford, a member of the Republican Party...
. While state treasurer, he won the Democratic primary in the 2010 U.S. Senate election in Illinois, making him the Democratic candidate for Barack Obama's former U.S. Senate seat.
Collapse
By 2009, Broadway Bank had become burdened with bad loans. On January 26, 2010, the bank agreed to restrictions from state and federal banking regulators: ending dividend payments to the Giannoulias family without regulatory approval, hiring outsiders to evaluate the senior management, adding $19 million to its reserves, raising another $50 million within 90 days to achieve its promised capital ratio, and adopting a less risky investment strategy. CFOChief financial officer
The chief financial officer or Chief financial and operating officer is a corporate officer primarily responsible for managing the financial risks of the corporation. This officer is also responsible for financial planning and record-keeping, as well as financial reporting to higher management...
Kaushik Pancholi, noting that Broadway has previously "been one of the most profitable banks in Illinois", noted "certain investments that were rated triple-A by rating agencies when purchased, but have lost significant value over the past year."
At the end of business on Friday, , the Illinois Department of Financial and Professional Regulation
Illinois Department of Financial and Professional Regulation
The Illinois Department of Financial and Professional Regulation is an executive agency of the U.S. state of Illinois. It was created in 2004 by an executive order promulgated by Governor Rod Blagojevich....
, Division of Banking, seized Broadway Bank and appointed the Federal Deposit Insurance Corporation
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...
(FDIC) as receiver
Receivership
In law, receivership is the situation in which an institution or enterprise is being held by a receiver, a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights." The receivership remedy is an equitable remedy that emerged in...
. The FDIC in turn named MB Financial Bank as the institution receiving Broadway Bank's deposit accounts. The FDIC announced that it and MB Financial Bank would share $878.4 million in losses, for a cost of $394.3 million to the federal Deposit Insurance Fund
Deposit Insurance Fund
The Massachusetts Depositors Insurance Fund was created by the state government of Massachusetts in response to the large number of Massachusetts bank failures during the Great Depression of the 1930s. This fund was the inspiration for the formation of the Federal Deposit Insurance Corporation...
. Broadway Bank was one of seven Illinois banks that were closed on the same day; the others were Chicago banks Citizens Bank & Trust Co., Lincoln Park Savings Bank, and New Century Bank; Amcore Bank in Rockford
Rockford, Illinois
Rockford is a mid-sized city located on both banks of the Rock River in far northern Illinois. Often referred to as "The Forest City", Rockford is the county seat of Winnebago County, Illinois, USA. As reported in the 2010 U.S. census, the city was home to 152,871 people, the third most populated...
; and Peotone Bank and Trust Co.
See also
- Alexi Giannoulias#Broadway Bank — details about Alexi Giannoulias' involvement in the bank
- United States Senate election in Illinois, 2010