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Failure Of Obama's Pet ShoreBank Costs Taxpayers $368 Million, Which Immediately Goes To Goldman Sachs Among Others
After a lengthy attempt to bail out his pet bank, ShoreBank Chicago, Illinois, which included several alleged armtwisting episodes by the administration, the president has finally let the bank die (with its assets valued at about 50% of face). Yet instead of going to hell, it was immediately resurrected with a bevy of new owners, among them Goldman, Morgan Stanley, and BofA, all of whom received nearly $400 million in taxpayer money for their "generosity" to keep the bank zombified even in the afterlife.
Some details on the bank from the FDIC press release: "As of June 30, 2010, ShoreBank had approximately $2.16 billion in total assets and $1.54 billion in total deposits." In other words, the value of ShoreBank's assets was well below 70% of face, if the bank was undercapitalized at its current deposit level. Continuing: "The FDIC and Urban Partnership Bank entered into a loss-share transaction on $1.41 billion of ShoreBank's assets. Urban Partnership Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $367.7 million." Netting the incremental cost of taxpayer DIF subsidies, means that the real value of assets was ($1.54 billion - $367.7 million)/$2.16 billion or 54% of face. And this is a bank that Obama wanted to keep alive at all costs? And just who is this "Urban Partnership Bank" that is receiving a taxpayer subsidy of $368 million? Why all the usual suspects of course: "The significant investors in Urban Partnership Bank are American Express Company, Bank of America, Citigroup, Ford Foundation, GE Capital Equity Investments, Inc., Harris Bank, the John D. and Catherine T. MacArthur Foundation, JPMorgan Chase & Co., Key Community Development Corp., Morgan Stanley, Northern Trust Corporation, PNC Investment Corp., State Farm Mutual Automobile, The Goldman Sachs Group, Inc., and Wells Fargo & Company." And so the old "out-of-one-taxpayer-pocket-and-into-another-Wall-Street-pocket" game continues, only this time it includes administration darling banks that should have been liquidated long ago.
By keeping ShoreBank artificially alive for far longer than it deserved, the assets amortized far more than they would have had it been taken into receivership by a non-conflicted bank, and thus the final cost to taxpayers would have been far less.
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. At least we now know just how truly angry at Wall Street Obama is.
The funniest bit: this is how efficient the auction process was (from the press release):
FDIC received only one bid, which included an asset discount of $146 million and a 0.5 percent deposit premium. This saved the FDIC’s insurance fund $250 million to $334 million over liquidation.
This also padded the top line of the abovementioned banks by $368 million off the bat, over and above whatever they make as they collect the proceeds from the portfolio run off.
In other words, Wall Street's core banks could have come up with any bid they wanted, and the FDIC would have had no choice but to fund the difference, because the alternative would be, gasp, so much scarier. Hm, where have we heard this before.
Full press release (link) and supplemental information (link) to this latest taxpayer gift to Wall Street's kleptocrats.
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40 millions? Are we talking about change?
I was always uder the impression that Iran was dumping wince they purchased the same presses (last two made) from the firm that produced the presses for the $100 FRN and moved them into the mountains after the Shah left. Presses for missiles maybe to the NKs?
The idea that North Korea can produce essentially exact perfect $100 US bills is laughable. It really is. Are we supposed to believe this?
It's not hard. They just subcontract it out.
It's the same thing with their "nuclear power" status. Just pay somebody to do it for you. Requires no brain cells at all.
It works because they are a sovereign and don't have to worry about "risk analysis" relating to prosecution. Since you and I don't have that protection, I would NOT recommend that you "sub-out" your printing (even though it is similarly very easy to do).
And so what's President Two Iron whining about today? Campaign finance.
No, seriously: http://news.yahoo.com/s/ap/20100821/ap_on_re_us/us_obama_campaign_finance
Yeah, I'm sure that's the biggest issue facing this once-great former-Republic - that corporations can now directly add their "voice" to our political discourse rather than having to employ a small team of lawyers and money changers like in the past.
Karl's at his best when he does ground-level reporting like this:
http://market-ticker.org/archives/2598-Are-Banks-Selling-WORTHLESS-Loans...
So, can anyone answer KD's questions (assuming he in fact is holding what he claims, and I can't imagine that he's not)? In particular, the 3rd question in the 1st bullet.
Unfortunately, Mr. Sotero is away on vacation in Martha's Vineyard and cannot be reached for comment.
This is the plan... This is why we have to attempt austerity... to keep the looting going. Effectively, local and regional banks are going to be strategically selected for liquidation up to the big boys in an attempt to further consolidate power as well as bolster balance sheets. Each round of musical chairs, a few are left without a seat, and are fed on up the chain.
Periodically, this money is siphoned out to the principal actors of the organizations... every bit of payout, salary, bonuses, options, goodwill, retirement, resume boosters, are all the fruit of the poisonous tree. These organizations should have died (or returned some kind of money from outsourcing) but for a captured government. As roubini wanted, they should have been nationalized, splintered, and properly auctioned.
With each growing day, as more and more consolidation takes place, it makes our ability to segregate them that much more difficult. They understand the moral hazard involved in keeping them alive and are utilizing it to the max. Some people are bashful about looking a gift horse in the mouth... but then again, we didn't want to bail them out.
The assets that are not cherry picked to bolster the TBTF balance sheets will be stuffed into the FED, GSEs, or some other lapdog. Eventually, the nonperforming assets will be so burdensome that no amount of monetary/fiscal policy will succeed in suppressing them. At such point, the fruit of the poisonous tree (grabbed over the last 30-40 years) will be utilized in the final battle of the war on the middle class, selling the remainder at even more reduced firesale prices.
Who gets the spoils and at what price? Don't watch the helper's giant tits, watch the magician's hands.
Fucking outstanding. +100000000000000000000
"Who gets the spoils and at what price? Don't watch the helper's giant tits, watch the magician's hands. "
Duly noted. Excellent!!!!!!!++++++++
It seems like bank consolidation is one of the major outcomes of every economic disaster
Due to severe asset inflation the magician's hands is on the tits all the time, I think he is trying to perform some form of easing.
I have my eyes glued on the wardrobe because usually it is at this time the skeleton breaks out and strangles the magician after which it runs away with the gold, that act is worth the price of the admission alone.
Run for your lives from Zimbabwe economics Obama
Tyler, congrats! you are getting alot of play today on the net, MM, DR, ect,, great job!
...am just going to say this once... anyone who "trusts" another human is a moron... "trust" is a free option... it's the "zero" in zero-sum... being "trustworthy" is something each individual totally controls... its the basis of capitalism and economic freedom... everyone gravitates towards (and wants to do business with) individuals who demonstrate "trustworthiness"... knowing the difference between "trust" and "trustworthiness" is survival bitchez...
You might reconsider the "one time only" part. Your statement is spot on and will probably need to be heard more than once. Thanks.
Between this and the GM IPO the Corporatism is really becoming self-evident now.
Interesting that there's no mention that Shore Bank is/was associated with the CCX (Chicago Climate Exchange) and the Ford Foundation, and that BHO is/was involved with all three!
$400 Million is a bribe for the banks to dispose of the Shorebank corpse where the authorities can't find it. Don't want anyone to actually perform an autopsy on the corpse and find the 50 pounds of heroin balloons shoved up its ass by the Chicago political parties and others.
Ya know Shorebanks mantra is "Let's change the world" but don't take my word on it...take Hillary's http://www.youtube.com/watch?v=9sQ6QOAlMgk&feature=player_embedded
Obama would've been charged , ala Maxine Waters, if he was still a legislator
How I survied a 36 hour man hunt will choppers, blood hounds and 20 of Denver's finest, with out food, water, shoes, or glasses, over 3 cities and 18 miles.
Thanks Tyler Durden,
You have been my biggest Inspiration!
www.WallStOnion.blogspot
Patrick the Painter
Inspector Asset
Take your pick.
Only one mention of Tony Rezko in this thread.
Dep't of Truth has been doin' a good job over the past year or so.
- Ned
Obama is quite active in the IL Banking business. Why waste time/energy Building a Business? Just go where the money is stored.
More on the Shorebank bailout:
http://www.economicpolicyjournal.com/2010/08/shorebank-bailout-scent-of-obama-and.html
What is so hard about a 3 letter word like "the"?
You morons keep typing "teh".
Ruins the flow.
- the other spelling Nazi
mynhair-
surely mere typos won't lead to federal charges. Did for these guys:
http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Dstripbooks&fie...
Their favorite? Milwaukee Furniture Store in Chi-town had their name spelled incorrectly.
- Ned
Investors in ShoreBank prior to its seizure by the FDIC:
Allstate Insurance Company
Bank of America Corporation
BP Corporation North America Inc.
Bullitt Foundation
Calvert Social Investment Equity Fund Catholic Healthcare West
Center for Community Change
Charles Stewart Mott Foundation
Chicago Community Foundation
Cleveland Tomorrow
CNA Financial Corporation
Cooperative Assistance Fund
Cummins Foundation Inc.
Development Equity Fund, L.L.C
Domestic and Foreign Missionary Society of the Protestant Episcopal Church of the US
Dominican Sisters of Springfield, IL
Ecotrust
Episcopal Diocese of Northern Michigan
F.B. Heron Foundation
Ford Foundation
Harris Bankcorp, Inc.
Health Care Service Corporation
Illinois Prepaid Tuition Trust Fund
Irving Harris Foundation
Irwin-Sweeney-Miller Foundation
JPMorgan Chase & Co.
John D. and Catherine T. MacArthur Foundation
Joyce Foundation
LaSalle National Corporation
Lumbermens Mutual Casualty Company
MAF Investments, Ltd.
Marquette Community Foundation
MBNA Community Development Corporation.
New Prospect Foundation
Northern Michigan University
Northern Trust Corporation
Piton Foundation
Prudential Insurance Company
R.D. Merrill Company
Regency Savings Bank, F.S.B.
South Shore Commission
State Farm Mutual Automobile Company
Twenty-First Century Foundation
UIDC Holdings, L.P.
Unitarian Universalist Congregation at Shelter Rock
United Church of Christ/ Local Church Ministries.
Wells Fargo Bank, N.A.
Wieboldt Foundation
The bolded names are the shareholders from ShoreBank who will be investors in the Urban Partnership Bank. If your investment fails the first time, try try again.
The "new" investors:
American Express
Citigroup
GE Capital
Goldman, Sachs
Key Community Development
Morgan Stanley
PNC Investment Corp.
Mr Astute Investor you have a good nose - but it does not take a bloodhound to smell out this carcass.
Where are the Investgative reporters on this. This, just by the attached names, tells me they are trying something on / Hiding something Big /rotten /festering and damaging to someone or something.
These big boys would not bend over on a sidewalk to pick up this nickel and dime offering. These precious little slime-balls are covering up or protecting something very valuable.In fact, these new investors would sell their Granny to a whore house if it meant a dollar. It has a smell like burnt flesh, fear and corruption. If you dig a little you will find a rabbit hole that comes out in the personal chambers of faceless men in Brownstone buildings. My tinfoil hat is literally glowing and the very reliable hairs on the back of my neck are a bristle.
Do you still have good Investigative journalists in the US ??????
http://en.wikipedia.org/wiki/Ugland_House
Oh ya, and did anyone happen to see who was on Tiny Timmy's bullshit Conference on the Future of Housing Finance?
Ellen Seidman, Ellen Seidman, Executive Vice President for Mission and Strategy, at ShoreBank Corporation, and Chair of the Board of Directors at the Center for Financial Services Innovation
http://www.ustreas.gov/news/index1.html
Unfucking believable.
And yet somehow after all of this shit that these douchebags got us into, they have the balls to put someone like this on this panel (regardless of how utterly fucking useless it was to begin with anyway). Basically, everyone was saying that we needed more government involvement in housing. TAKE ME NOW FROM THIS CRUEL WORLD!!! Who wants to go in on a nice duplex in Beijing, Tehran, or Moscow or somewhere else free in the world??
Thanks for such a great post and the review, I am totally impressed! Keep stuff like this coming!...
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