Meanwhile, even as the Administration seems to be finding signs of a "recovery," a parade of failures march on from the discovery that there is an oil slick the size of Manhattan in the Gulf to the persistence of frauds in finance from state pension funds in New Jersey to the case against the head of the Bank of America.
Even worse, Shorebank, one of the banks that community activists considered a national model of social responsibility has gone down in Chicago, the 104th (some say 114th) bank to fail this year with 15 branches including some in Detroit and Cleveland. It was also active in 40 countries. In June, it reported over $2 billion in deposits. By August, it was gone.
In all, 349 US banks have disappeared since 2007.
ShoreBank promoted itself as a community development and environmental bank. It was based in Michelle Obama's old neighborhood with the slogan "Lets Change The World." Now the world of Wall Street has changed the bank with a partnership of investors including American Express, Bank of America and Goldman Sachs taking over under the name "United Partnership."
Hundreds of other banks are on the FDIC hit parade and may be next.
There were many worse casualties in banking in the past according to Barry James Dyke's informative book, Pirates of Manhattan. He notes that ten thousand banks failed during the depression and 2,900 bit the dust in the S&L crisis. The current number may have been higher had Congress not bailed out the Banksters who used some of our money to play PacMan, gobbling up smaller institutions.
AP reported, "ShoreBank lost $39.5 million in the second quarter amid soured real estate loans. The bank had been under a so-called cease and desist order from the FDIC for more than a year, requiring it to boost its capital reserves. ShoreBank was able to raise more than $146 million in capital this spring from several big Wall Street institutions. It was unable, however, to secure federal bailout funds it sought from the Treasury Department's Troubled Asset Relief Program."
Republicans are "investigating" alleged Administration support for the Bank,
AP explained, "Rep. Darrell Issa of California, the senior Republican on the House Oversight and Government Reform Committee, sent a letter to a White House legal adviser asking specific questions on possible contacts between administration officials and executives of ShoreBank or potential investors.
The White House has said no administration officials met with ShoreBank concerning its rescue or requested help from financial institutions on its behalf." "
Questions raised by Republicans, of course, seek to politicize the issue when it is the FDIC "s deal with the big banks that needs to be probed, as Zero Hedge explains:
"As it stands, Goldman and 11 other banks are receiving a multimillion dollar gift to conduct a portfolio liquidation run-off of ShoreBank's assets, while merely making sure existing deposits are serviced."
(Note: the FDIC is led by Sheila Barir. a Republican.)
Blogger Mike, "Mish" Shedlock concludes: "The FDIC's handling of Shore Bank smells as bad as a pile of dead alewives on a Chicago beach in mid-July."
My question is: Why didn't the Administration help shore up ShoreBank (if it could be shored up) as they did so many of the "too big to fail" banks?
Their hands-off attitude, perhaps in fear of being criticized, as they were anyway, helped doom the bank and, by extension, the idea that we could have socially responsible lending institutions.
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