A Notable Failed Bank In This Week's Busted Banks

We're up to 114 in 2010 now.  Eight banks went down this week, in Florida, California and Virginia, as the total keeps rising.  But it's the eighth failed bank this week, number 114 this year, that's a bit different.

ShoreBank, a privately owned bank known for its philanthropic activities, had received multi-million dollar investment commitments in recent months from Goldman Sachs, Citigroup, JPMorgan and Bank of America, as well as from General Electric.

But the bank, which was put on the ropes when the recession hit its lower-income borrowers especially hard, was unable to secure the funds it was seeking from the government's Troubled Asset Relief Program, or TARP, it needed to match private-sector pledges.

ShoreBank's deposits will be taken over by a newly chartered institution called Urban Partnership Bank (UPB). Its 15 branches also will shift to the new bank.

In other words, ShoreBank was trying to invest in lower-income residents of Chicago when no one else would.  The money finally ran out...you see, Wall Street nor the government would help them out.

Attempts to rescue ShoreBank have played out in the media for months, with lawmakers and watchdogs questioning whether special treatment was being given to the bank.

ShoreBank is located on Chicago's South Side near the home base of President Barack Obama and some of his top aides, and the bank has promoted on its website connections to Obama.
ShoreBank has received national recognition over the years for its efforts to extend loans to low-income communities and environmental cause.

It has some prominent supporters with strong ties to Washington, including Ellen Seidman, former director of the U.S. Office of Thrift Supervision, and Eugene Ludwig, former U.S. Comptroller of the Currency.

U.S. Rep. Jan Schakowsky, who represents Chicago's North Side, lobbied Wall Street banks this year to save the 37-year-old bank. She has blamed Wall Street's "recklessness" for the foreclosure crisis that precipitated ShoreBank's losses.

But bank activity with a philanthropic bent has not been profitable lately. For the quarter ending March 31, ShoreBank reported a $17.1 million operating loss, compared with an operating profit of $384,000 in the year-earlier period.

And now we see why.  It became politically unprofitable to help lower-income residents in Chicago with Obama as President.  No doubt the bank had to go.  Too vulnerable to the President coming under attack, and not worth trying to defend it.  Wall Street banks on the other hand, too big to fail.

That's the America we live in, where helping lower-income people secure a loan is in an of itself a potential crime.  Then again, so is being Muslim, Latino, gay, black, or liberal...
And poor.