Giannoulias Speaks

Alexi Giannoulias sat down with the Tribune editorial staff last week to try and explain his role in the debacle in his family's bank, Broadway Bank.

Giannoulias took great umbrage at the suggestion that risky lending practices precipitated the bank's decline. Though he acknowledged that in retrospect the bank was overinvested in real estate, he insisted that his now-deceased father, an immigrant who founded the Edgewater bank in 1979, placed great faith in the stability and safety of property as an investment.

Giannoulias didn't challenge often-cited figures that place Broadway further out on the limb than its peer institutions: Of 240 banks its size, it ranked second in percentage of loans that went to real estate and 10th in loans for construction and
development. Its reliance on volatile brokered deposits was far higher than the industry average. All of those measures climbed dramatically between 2002 and 2006, when Giannoulias left the bank to run for state treasurer. That year, Broadway was the fifth most profitable community bank in the country, and young Giannoulias' campaign capitalized on that success.

Giannoulias once told a mutual friend that have gave loans to a savory character because he simply qualified. His credit was excellent and he had the proper income. That's exactly what he told the Tribune staff as well.

If this interview was supposed to "clear the air" as Giannoulias said in the beginning, it certainly didn't appease the Tribune editorial board. The board concluded that Giannoulias was essentially talking out of both sides of his mouth. He took great credit when the bank was doing well. When it's tough, he says that others, his father for instance, made decisions. Yet, his experience at Broadway was the single accomplishment that Giannoulias used to win the Treasurer's seat. His four years are rather unaccomplished.

This story isn't going away. The bank will likely be in the hands of regulators in a month. The story will continue to be on the front pages. This race will be the ultimate proof of Tip O'Neil's famous proclamation, "all politics is local". This race will be all about Giannoulias' actions during his days as the senior loan officer at Broadway Bank.