Back to Basics

Hmmm. Feds moved to shut down Obama crony bank ShoreBank today, but it’s not really going away (refresher course here and here).

Via Reuters:

Regulators on Friday seized notable Chicago-based community development bank ShoreBank after Wall Street backers failed to rescue the institution, and its deposits will be taken over by a newly-chartered bank.

ShoreBank, a privately owned bank with a national reputation for its philanthropic activities, had received multi-million dollar investment commitments 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. Its 15 branches also will shift to the new bank.

The Federal Deposit Insurance Corp said the bank had $2.16 billion in assets and $1.54 billion in deposits.

Who is “Urban Partnership Bank?” This press release lists officials with Shorebank e-mail addresses as the contacts for the Urban Partnership.

And many of the same old Big Biz investors and left-wing activists who tried to prop up Shorebank are investors in the new reincarnation:

The group seeking to buy ShoreBank, the ailing South Side lender expected to be seized by federal regulators Friday, plans to name former First Chicago executive Bill Farrow as the chief executive and president of the institution if it succeeds at bidding for certain assets and deposits of the failing bank.

It means that three former First Chicago executives will be running the show if their bid succeeds.Many of the large institutions that earlier had committed about $150 million to Chicago-based ShoreBank as it unsuccessfully sought $75 million in government aid will be investors in the new bank, whose charter is named Urban Partnership Bank.

They’ll likely put in about the same amounts as before, though a few smaller contributors might have dropped out. Besides big banks, the group also will include philanthropic groups, insurance companies and socially minded individuals who believe in ShoreBank’s mission of serving underserved communities in Chicago, Detroit and Cleveland.

As I noted several weeks ago, the White House denies it has played any role in trying to broker a bailout. But Shorebank’s Windy City ties to Obama are too numerous to ignore. And so is this administration’s penchant for bullying and bribery.

A crony bank by any other name smells just as rotten.

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From ZeroHedge: Failure Of Obama’s Pet ShoreBank Costs Taxpayers $368 Million, Which Immediately Goes To Goldman Sachs Among Others…

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.

In May, I reported on the attempt by a coalition of government-corporate-left-wing advocacy interests to shore up the social justice banking poster child, Chicago-based Shorebank.

Yesterday, I told you about Shorebank’s latest dire financial reports, showing an even worsening capital deficiency than first thought.

Today, Bloomberg reports that the bailout deal may crumble:

ShoreBank Corp., the unprofitable Chicago lender to low-income communities, may be forced out of business after failing to win $75 million of federal bailout funds, three people with direct knowledge of the matter said.

ShoreBank raised more than $145 million in May from General Electric Co. and banks including JPMorgan Chase & Co. and Goldman Sachs Group Inc. That money was contingent on more federal funding that is now unlikely to be released, the people said, speaking anonymously because the matter is private.

“It looks like they are just out of options,” said Gerard Cassidy, a bank analyst at RBC Capital Markets in Portland, Maine. “Without a lot of private equity, their hands may be tied and the only option might be putting it in receivership.”

…The money raised in May was placed in an escrow account and is scheduled to be returned to investors tomorrow unless the government agrees to provide money or some other remedy can be found for the bank, according to a person who helped arrange the investments.

The White House denies it has played any role in trying to broker the bailout. But Shorebank’s Windy City ties to Obama are too numerous to ignore. And so is this administration’s penchant for bullying and bribery.

GOP Rep. Spencer Bachus wants an investigation into how the highly unusual, Goldman Sachs-led coalition to save Shorebank was formed — and at whose behest. Via Fox Business:

As if ShoreBank doesn’t have enough problems, the financially troubled but politically connected Chicago-based community lender is now facing a federal investigation into whether political pressure was applied to force several major Wall Street firms to bail out the bank before it was liquidated by banking regulators, FOX Business has learned.

Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program, or TARP, which has agreed to earmark $75 million to help ShoreBank survive, has now bowed to pressure from Congressional Republicans and has agreed to investigate charges that key officials in the Obama White House, as well as FDIC chief Sheila Bair, pressured Wall Street firms to donate money to keep ShoreBank alive.

In a letter to Congressman Spencer Bachus, ranking member of the House Banking Committee, Barofsky said his office has “agreed to do an audit” of the federal program that granted ShoreBank the money about two months and examine the “issues raised” in a letter Bachus sent to the White House, asking for records and other documents detailing whether key administration officials played in role in convincing Wall Street to help bail out the bank.

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Question: Is Shorebank on the president’s Chicago agenda today? Perhaps there’s a transparency-evading coffee house meeting on the schedule somewhere…

The only person who has been fired in the midst of the oil spill fiasco has been the former head of the Minerals Management Service of the Department of the Interior.

According to a June 17 editorial in The Wall Street Journal, it is now clear that both the Secretary of the Interior, Ken Salazar, and the White House energy “czar”, Carol Browner, both lied to the nation regarding the recommendations by drilling experts, alleging that they had agreed to a moratorium on oil drilling in the Gulf.

Browner, citing the falsified recommendation to impose a moratorium, inserted after the memorandum had been received, said, “No one’s been deceived or misrepresented.” She lied.

From the beginning of the oil spill, the administration has failed to respond in a timely fashion.

In an article in Human Events the following lack of action by the administration was cited:

It failed to accept help offered by the Netherlands to help with skimming booms and plans to create barriers.

It failed to suspend the Jones Act in order to allow foreign vessels into American waters.

It failed to suspend the Davis-Bacon wage laws to allow rapid deployment of new workers to help the containment efforts.

It failed to suspend FEMA contracting and bidding rules.

It failed to allow coastal governors to immediately begin dredging to create barrier islands.

Failure on this scale requires that those involved should lose their jobs. We cannot “fire” the President, but his administration is shot through with people from the highest level to those below that exacerbated the Gulf oil spill.

The Secretary of Energy, Dr. Steven Chu, has barely been heard from. The Secretary of the Interior has been silenced since his comment that he would keep his “boot on the neck of BP.”

It took nearly two months before the President met with officials from BP.

The President has been soundly criticized for his lack of competence in office while he devoted himself to passing the hated Obamacare legislation and drove the national debt to levels unseen in the history of the nation.

What the President has offered is a “commission” to study the event. He continues to advocate “a clean energy future” filled with solar and wind farms. Neither can even begin to meet the needs of a small city, let along the nation. All must be backed up by coal-fired, natural gas, and nuclear plants.

Waiting in the Senate for a vote is the infamous “Cap-and-Trade Act”, renamed several times now to mask the fact that it would impose a massive tax on all energy use by Americans and cede to the Environmental Protection Agency powers based on the entirely false assertion that carbon dioxide is responsible for “global warming.” There is no global warming. It is a lie.

A recent vote by the Democrat-controlled Senate opened the door to this eventuality even if the Cap-and-Trade Act is not enacted.

The Secretary of the Interior should be fired. Carol Browner, the President’s energy advisor should be fired.

On her website, the illustrious Big Gavel commented on last night’s President Obama speech on the oil spill.

How long have the Democrats controlled Congress, anyway? Just wondering:

“The disastrous BP oil spill is a harsh reminder of the price we are now paying for the Bush Administration and Republican Congress placing the employees of Big Oil in charge of regulating their own industry.

Questions abound: If “big oil” is in charge of regulating its own industry, why was the Minerals Management Service Director the first head to roll over this? Also, Obama, Pelosi, Reid, etc, can orchestrate a takeover of Wall Street, health care and an auto company virtually overnight, but, almost two years after Bush left and several years after the GOP lost control of Congress, they couldn’t change how the drilling industry was regulated?

Pelosi naturally skips over the fact that, during two terms of Bush, BP’s Deepwater Horizon rig received six safety citations. During Obama’s first term, the rig was given a safety award.

Since the spill is all the fault of Bush and the Republicans who haven’t controlled Congress for four years, Obama didn’t see it necessary to meet with BP execs for more than 20 minutes, and BP has agreed to put $20 billion in a trust fund for victims of the oil spill.

If somebody finds a way to plug the hole with gall, the country will finally have a good use for Nancy Pelosi.

FILE - In this June 25, 2009 file photo BP's newly appointed Swedish chairman Carl-Henric Svanberg, left, poses for photographs with their CEO Tony Hayward in London. Shares in BP PLC fluctuated in London trading Wednesday June 16, 2010 ahead of what promises to be a tense meeting between the oil company's chairman and President Barack Obama in Washington. Obama has vowed to make BP pay for all of the damage caused by its leaking well in the Gulf of Mexico, and has demanded that the company set up an independently controlled fund to assure that it will pay. (AP Photo/Matt Dunham, file)

BP Chairman Carl-Henric Svanberg was determined to stay on message following a four-hour meeting at the White House with President Obama and a host of aides and cabinet secretaries.

Svanberg delivered a precise and lawyerly statement to reporters, reading from a handful of note cards. But when he went off script in response to a few questions, the Swede uttered a phrase that overshadowed everything else.

He referred to people affected by the oil spill as “small people,” in a damaging slip of the tongue that reinforced the impression many people have of oil companies as arrogant and out of touch with all but the pursuit of higher profits at any cost.

It followed on the heels of BP Chief Executive Tony Hayward’s complaint in May that he wanted his “life back.”

Svanberg, with Hayward and two other BP executives standing behind him, took only four questions from the enormous crowd of reporters that had gathered outside the West Wing — some of them waiting for several hours.

When asked how much time he had spent with Obama, Svanberg talked about the president’s strong feelings about the impact of the oil spill on the people of the Gulf Coast.

“He is frustrated because he cares about the small people and we care about the small people,” Svanberg said in accented English.

“I hear comments sometimes that large oil companies are greedy companies or don’t care. But that is not the case in BP. We care about the small people,” he said.

A BP spokesman told The Daily Caller that Svanberg’s choice of words was “a bit of a language issue” caused by his lack of expertise with the English language.

“The words weren’t quite right. Local people, local businesses is what he meant by that,” said the BP spokesman, who did not want to be identified. “He just means the small businesses, the local people, the local people affected.”

Svanberg’s comments came after Obama announced that BP had agreed to pay $20 billion over the next four years into an escrow account to be paid out to those affected by the spill, which has now been spewing oil into the Gulf for almost two months.

Obama said the $20 billion figure was “not a cap.”

“The people of the Gulf have my commitment that BP will meet its obligations to them.

President Barack Obama walks to the Oval Office of the White House in Washington, Tuesday, June 15, 2010, after returning from a trip to the Gulf Coast. He will address the nation from the Oval Office this evening. (AP Photo/Alex Brandon)

President Obama faced criticism in the lead-up to his first-ever Oval Office address to the nation over whether he is using the oil spill in the Gulf of Mexico to push a cap-and-trade bill and whether the government has the legal authority to force BP to create an escrow account for claims to be handled by a third party.

The White House pushed back on the matter of the escrow account, saying it was needed and appropriate because of BP’s “recklessness” that precipitated the spill, which has now leaked an estimated 142 million gallons of oil into the Gulf since the pipe first ruptured nearly two months ago.

Senate Minority Leader Mitch McConnell, Kentucky Republican, said Obama was using the crisis to promote an energy bill with a price on carbon, an idea that was considered dead in the water until the spill occurred nearly two months ago.

“Now is not the time to push ideology. It is time to fix the problem,” McConnell said in a speech on the Senate floor.

Obama’s Oval address follows the president’s two-day trip to the Gulf region to oversee response and recovery efforts.

McConnell said the president wanted to “use the justifiable public outrage over an explosion that killed 11 people and the oil spill that followed as a tool for pushing a divisive new climate change policy even as hundreds of thousands of gallons of oil continue to spill into the Gulf each day.”

The White House declined to respond directly to McConnell’s charge. And in fact, a senior White House official told reporters that the president “absolutely” believes that putting a price on carbon is the only way to make progress on climate legislation.

“Some will argue that the costs are too high, that we can’t afford to do this right now,” she said. “[But] we can’t afford not to because the long term costs to our economy, our national security and our environment are far greater.”

Some on Tuesday also questioned whether the government has — as the White House claimed Monday — the legal authority to force BP into handing over as much as $20 billion to a third party for payment to claimants harmed by the spill.

“The escrow proposal is designed to cover political damages, not economic damages. Congress can’t manage its own budget, let alone BP’s budget,” said John Hart, spokesman for Sen. Tom Coburn, Oklahoma Republican.

The Wall Street Journal editorial page said the play was pure political bullying.

“The White House knows it has no legal authority to demand such a corporate ATM card, but it is counting on public anger to coerce BP to go along,” the Journal wrote.

The man who led the Pentagon’s response to the Exxon Valdez spill in 1989, retired Air Force Lt. Gen.

I have a friend of over twenty-five years who I watched build a single idea for a business into one that, at one time, was taking in a million dollars a year. Then the Internet came along, followed by the 2008 financial crisis.

After a reasonable period of agonizing, my friend sat down and put the numbers on the page. They added up to firing all his employees and not renewing the lease on the office in which he’d been since the mid-1980s. Tech savvy, his business has gone “virtual.” As he put it, “I will make sales from my cell phone.”

Now take my friend, the classic entrepreneur and small business owner, and multiply him by thousands across the fruited plains and purple mountains majesty. Not only has the economy crashed, thanks to the latest “bubble” of bad housing mortgages, but it happened just in time to ensure that Barack Obama who never owned a business, met a payroll, or worried about selling anything other than himself was elected president.

Next on the list of burst bubbles will be all the “green” technology and “clean energy” companies into which the government has been pumping billions in subsidies for wind and solar power, grants for research on biofuels, electric cars, and all the other “green” projects the public continues to be told represent a bright new world.

Why would anyone think that a “community organizer”, academic, and briefly a working lawyer, could know or even be brought up to speed fast enough to know what to avoid and what needs to be done to put people back to work or help small to medium businesses? The answer is he couldn’t and he wouldn’t and he didn’t.

Obama’s most basic instincts are a liberal distrust of “big business”, “Wall Street”, and anyone else involved in shaping and making the economy. This is particularly true since his political rise has been fueled by millions from unions. He is their man. They own him. He is beholden to a number of other special interests, but that is where his heart is. That is where he looked for and received campaign funds, campaign manpower, and votes.

Once in office, he set about reversing the slow and well-deserved decline of unions that, while having a long-ago past history of correcting working conditions, are now totally parasitic no matter whether it is the auto or any other industry, or whether it is in the public service sector where they toil as government workers, teachers, and others whose work rules, health benefits, and pensions have contributed to the insolvency of most states and cities.

They and the nation’s other blood-suckers, the lawyers, are Obama’s chosen constituency and everybody else can just plain go to hell or shut up and take a government-issued check for a return on taxes you may not have paid (40% do not pay taxes these days), your food stamps debit card, or any of the other government handouts that keep people docile and unproductive.

Writing about the national debt, Stephen Dunn, said, “At $13 trillion, that figure has risen by $2.4 trillion in about 500 days since President Obama took office, or an average of $4.9 billion a day.” – Washington Times, June 2, 2010.

There are reports that the U.S. Treasury is predicting U.S. debt will be $15 trillion by 2015. Federal Reserve chief, Ben Bernanke just warned Congress that this is “unsustainable.”

One of our favorite cartoon characters is the guy with the sign that says, “The end of the world is coming. Repent!” You can find him enshrined in the Old Testament’s Jeremiah, between Isaiah and Ezekiel.

“I am the laughing-stock all the day, every one mocketh me,” lamented Jeremiah (Chapter 20). He was, of course, warning his fellow Israelites that trouble was headed their way and, sure enough, it was. It always is. I am 72 and have not lived a day when there wasn’t a war in progress somewhere. This also means I was born in the midst of the Great Depression and have lived long enough to see another coming my way.

A lot of people are going to get all worked up over the predicted end of the world in 2012. The prediction will sell books, there will be a movie, but the world will not end. The Earth is 4.5 billion years old and has been around before and since the Mayans who are no more.

On the contrary, our present troubles will begin to end that year when we bid goodbye to Barack Obama after the national election and begin to undue the unbelievably awful “reforms” and “transformation” he has forced upon an unwilling America. The Supreme Court may or may not play a role in this, but it will mostly be up to the voters.

I was thinking about the current financial crisis while reading a recent issue of Business Week that gave a thumbnail description of just six U.S. States that are mired in debt. Leading the pack is California, mired in $272.4 billion worth of debt. Its governor is trying to close a $19 billion gap for the year starting on July 1.

Governor Chris Christie of New Jersey took office with a debt load of $207.4 billion. He is trying to bridge an annual budget shortfall of about $11 billion. He has stunned the State and the nation by speaking the truth about it.

Illinois has a debt load of $237.3 billion, Michigan comes in at $207 and New York State has $203.8. All of these States have one thing in common, legislatures controlled by Democrats, not unlike our current Congress.

The other thing they have in common are public sector unions representing government workers, teachers, and such that have negotiated wage increases, health care benefits, and pensions that make your eyes roll when you find out the details.

The old saying, “When you’re in a hole, stop digging” applies to the federal government in general and President Obama in particular.