Ill. GOP Senate candidate Kirk calls on Democratic opponent to discuss work at struggling bank

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Kirk talks tough on Giannoulias bank troubles

CHICAGO — Republican Senate candidate Mark Kirk touted ways to help small businesses on Monday, while talking tough about Democratic opponent Alexi Giannoulias, whose struggling family bank is being closely watched by regulators.

The bank’s financial problems have become a key issue in the race for President Barack Obama’s old Senate seat as Kirk tries to portray Giannoulias as an inexperienced and failed businessman. The 33-year-old Giannoulias was an executive at Chicago’s Broadway Bank before he was elected Illinois state treasurer in 2006.

Kirk, a five-term congressman from Chicago’s northern suburbs, called on Giannoulias Monday to answer questions about his work at the bank. He also claimed Giannoulias bears “direct, personal responsibility for reckless loans” that could bankrupt the financial institution Giannoulias’ late father founded more than 30 years ago.

“Alexi Giannoulias engaged in the same kind of reckless lending that brought our U.S. economy to its knees,” Kirk said.

Giannoulias spokeswoman Kathleen Strand shot back that Kirk’s statement was “wholly inaccurate” criticism from a Washington insider.

In January, the bank entered into a consent decree with regulators that gives it 90 days to raise new money because it’s undercapitalized. The bank also has to deal with bad assets and improve its management.

The bank, which lost $75.3 million last year, is under pressure to come up with about $85 million in new capital, said bank spokesman Tilden Katz.

Katz said the bank is trying to do that by reaching out to private investors, longtime customers have offered to help and the family is ready to put in money. The family, including Giannoulias, has been criticized for receiving large dividends from the bank in the past.

“It’s a difficult time to raise capital, but the bank is doing everything it can,” Katz said.

The bank, which is heavy into real estate loans, has about $242 million in nonperforming assets or bad loans and about 9 percent of them originated when Giannoulias worked at his family’s bank, Katz said.

Kirk, 50, has tried to make an issue of those loans, as well as loans made to a convicted bookmaker.

“I also worry that the possible collapse of the Broadway Bank will leave taxpayers left paying for Alexi’s reckless loans,” Kirk told reporters.

Strand said coverage by the Federal Deposit Insurance Corp., which insures individual depositors up to $250,000, is financed by fees on the banking industry, not by taxpayers.

Giannoulias’ banking work was a centerpiece of his campaign for treasurer four years because it was the only significant job experience he had before being elected.

Kirk tried to beef up his business bona fides Monday by touting a small business bill of rights he wants to introduce in Congress. His wish list includes exempting small business from capital gains tax for 10 years and having low or no estate taxes.

Sen. Dick Durbin, Giannoulias’ campaign chairman, said Sunday that he has encouraged his fellow Democrat to hold a news conference to talk about the bank.

“There are a lot of people who want to attribute all sorts of things to him, but most people in fairness will say, ‘You know, he’s been away from this for four years,’” Durbin said.