Federal regulators shut down the bank owned by Illinois Treasurer Alexi Giannoulias' family on Friday, setting up an expected but daunting challenge in his bid to keep President Barack Obama's old Senate seat in Democratic hands.
Broadway Bank, which was heavy into real estate loans and lost $75 million last year, had been given until Monday to raise about $85 million in new capital, but the Federal Deposit Insurance Corp. announced at the close of business Friday that Broadway was among four banks, all in Illinois, that had failed.
Giannoulias, 34, worked at the bank as a senior loan officer until he ran for treasurer four years ago. He has tried to take some of the political and public relations sting out of a collapse, acknowledging the bank is likely to fail but blaming the bad economy. He also said it was financially healthy when he left four years ago.
But his Republican opponent, U.S. Rep. Mark Kirk, has made the bank's finances a central issue in their Senate race and will continue to focus on Giannoulias' "reckless decision-making" at Broadway, Kirk spokeswoman Kirsten Kukowski has said.
Giannoulias' campaign and Democratic insiders have maintained he can still beat Kirk, a moderate Republican and an officer in the Naval Reserves. Democrats outnumber Republicans in Illinois, and Obama remains a popular figure in the state.
And on Friday, the White House said Obama intends to help Illinois Democrats "up and down the ballot." Giannoulias campaign chairman, U.S. Sen. Dick Durbin, said the White House has asked about the state of Giannoulias' campaign.
Joey O'Neill, a Broadway customer for 20 years said Friday that he won't hold the bank's failure against Giannoulias.
"They've always been good to me," O'Neill said before the bank closure was announced.
All of Broadway's deposit accounts, excluding certain brokered deposits, were transferred to MB Financial Bank. The accounts will be available immediately, and the former Broadway Bank locations will reopen as branches of MB Financial Bank, N.A. during regular business hours, the FDIC said.
Two other Chicago banks and one in Rockford, Ill., also were closed, the FDIC announced.
Customer accounts are insured by the FDIC up to $250,000.