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September 2009
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What Have You Heard About Alexi Giannoulias??

AlexiAt 30, Alexi Giannoulias became the youngest state treasurer when he was elected Illinois State Treasurer in 2006. Then Senator Obama backed him in 2006 calling him “one of the most outstanding men I ever could hope to meet.” Perhaps another quick political rise for an Illinoisan coming from political obscurity as Mr. Giannoulias campaigns for President Obama’s senate seat.

Alexi Giannoulias finds himself in an enviable position. In a state historically favorable to democrats, he is the front runner in the February 2, 2010, democratic primary for Obama’s vacated senate seat. At the age of 34 years old, he could find himself sworn into the United States Senate, if he can defeat his democratic rivals– former Chicago Inspector General David Hoffman and Chicago Urban League President, Cheryle Jackson- and win the November 2010 general election.

Will his current position translate into the United States Senate or out of elected office? The latter if you were asking Illinois’ Republicans, who feel they match up well with Giannoulias next fall– especially if the GOP’s current front runner, Mark Kirk, can win the Republican primary on February 2nd. Maybe that’s why you see Illinois Republicans smile when they not too quietly ask: “What have you heard about Alexi?”

Mr. Giannoulias’s state treasurer’s website touts his accomplishments before and after his election as state treasurer:

At the age of 30, Alexi Giannoulias became the youngest State Treasurer in the nation when he was elected to office on November 7, 2006.

A former community banker, Giannoulias uses his financial expertise and business acumen to employ innovative investment strategies to get a better rate of return on the 17 billion in taxpayer dollars that his office is responsible for investing on a daily basis.

Shortly after taking office, Giannoulias overhauled the state’s Bright Start College Savings Program, allowing families to earn more money for their children’s college tuition.

Giannoulias announced changes to Bright Start that will make it one of the most competitive tax-exempt college tuition programs in the nation with better performing funds and lower costs so more children can earn a college degree.

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Prior to taking office, Giannoulias served as vice president and senior loan officer at Broadway Bank in Chicago’s Edgewater community. Crain’s Chicago Business rated Broadway the No. 1 Bank in Illinois for five years based on return on assets.

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In endorsing Giannoulias as an independent Democrat, the Chicago Sun-Times wrote, “We believe Giannoulias’ banking experience will help him bring creative money management ideas to the treasurer’s office.” The Daily Herald endorsed Giannoulias’ primary bid on his “strength of banking and investment expertise suited to the office.”


That was then, this is now.

Bright Start– Giannoulias’s crowning achievement– has lost some, if not all, of its luster. Not only did Bright Start lose $85 million, although there is a deal in the works to get much of it back as Bright Start’s manager apparently made some high risk investments. Mr. Giannoulias has a banker’s background and touts using “his financial expertise and business acumen to employ innovative investment strategies to get a better rate of return.” However, it appears that “innovative investment strategy” was to outsource his job, gambling away millions of your dollars by giving that money to a fund manager that made high risk trades, ending in losses. Maybe his “banking background” is not so much of a positive?

As his biography notes, Mr. Giannoulias took the title of Vice President of Broadway Bank, after passing the Illinois Bar Examination. Going through his timeline, he was admitted to the state bar on November 7, 2002– which means immediately after law school he was installed as the bank’s Vice President. Presumptively, it took him one year to learn the job (which would be a great learning curve) and he spent the last year– 2006– running for elected office. So, he really did his job at the bank for two years. Did that two years of experience qualify him for the job of treasurer of the nation’s fifth largest state- and now for the United States Senate? Ask yourself, which qualifies him more: two years at Broadway Bank or years playing basketball with Barack Obama?


According to Crain’s Chicago Business, our treasurer’s ties to the family owned bank is not a positive. Although Mr. Giannoulias no longer works at the bank, in 2007 and 2008– in the middle of the financial meltdown– the bank paid $70 million in dividends to the family. Over the same two year period, the bank’s net income was $35 million. Broadway Bank– held 100% by the Giannoulias family– paid almost double in dividends than what other similar privately held banks paid in dividends over the same two year period: West Suburban Bank had a net income of $40 million and paid dividends of $39 million. Marquette Bank: income of $12 million and dividends of $19 million and Bridgeview Bank had income of $13 million with dividends of $4 million.

What is interesting about these numbers is that Broadway Bank is by far in the worst financial position of these four banks. According to Crain’s Chicago Business:

Broadway boosted loan-loss reserves to $44 million in the second quarter of this year, but its financial cushion still looks too thin to absorb future losses. Non-performing assets (delinquent loans, foreclosed property and restructured loans) total $195 million, 1.7 times Broadway’s equity and reserves. In previous banking crises, lenders with so-called “Texas ratios” of 1.0 or higher generally failed without equity infusions, banking experts say.”


(Crain’s Chicago Business, September 7, 2009, pg 12). Bert Ely, a Virginia based banking consultant said: “Those dividends are appalling.”

Is it just me or does that sound like the family’s taking money out of the bank before it fails? The money that the family took out could at the very least help keep it afloat. And if there is an equity infusion, it better not come from our government after the Giannoulias family paid itself 200% of the bank’s income during a financial meltdown. Maybe that is part of his family’s “financial expertise and business acumen” that “employ(s) innovative investment strategies” to get a better rate of return for the Giannoulias family, while leaving the bank’s depositors in peril. My bet is that if a capital infusion does not occur and if Broadway is doomed– it will stay afloat until sometime around Thanksgiving 2010. Right after the general election for the Obama senate seat.

Maybe that’s why, according to the September 16, 2009, Politico article, the Illinois democratic party actively sought Chris Kennedy, son of former United States Attorney General, Robert F. Kennedy and nephew of slain President John F. Kennedy to run for this seat. The Illinois Democratic Party did not stop there. It tapped former Commerce Secretary William Daley and the current Illinois Attorney General Lisa Madigan. With Lisa Madigan, the overture was made in the West Wing of the White House by the President himself– potentially a signal that Mr. Giannoulias no longer has the complete confidence of Mr. Obama.

The Illinois Republican Party at writes what many people are not too quietly whispering about Mr. Giannoulias:

The Giannoulias family bank, Broadway Bank, made millions of dollars in loans to Tony Rezko as well as Michael Giorango and Boris Stratievsky, convicted felons and reputed mob figures. These loans were made while Alexi Giannoulias was the chief loan officer.

Although the issue was raised in 2006 during his run for treasurer, the issue will again be raised under a different prism in 2010: the prism of Rod Blagojevich and “pay to play” politics. Was Alexi allowed to play because his bank paid Illinois mobsters? How will it look with presumptively millions of dollars in his pocket while his bank is in dire straits? That doesn’t sound like change we can believe in, but rather politics as usual in Illinois and Washington D.C. Maybe that’s why President Obama seems to be distancing himself politically from “one of the most outstanding men I ever could hope to meet.”

 This is the democratic front runner. The question remains: what have you heard about Alexi Giannoulias? Ask someone that question– many times, you’ll find that the answer will please Illinois Republicans.


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