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Pious Perverts See other Pious Perverts Articles Title: Blankfein aids Chicago Bank By Stephanie Kirchgaessner and Tom Braithwaite in Washington and Suzanne Kapner and Francesco Guerrera in New York Published: May 13 2010 23:17 | Last updated: May 13 2010 23:17 Lloyd Blankfein, Goldman Sachs chief executive, is playing a personal role in helping to arrange a $125m rescue for a Chicago community bank which provides loans to lower-income communities, people familiar with the matter say. The lender, ShoreBank, was told by the Federal Deposit Insurance Corporation in March that it had 60 days to raise capital or risk being seized. Mr Blankfein has been making phone calls to rally support for a deal that would see some of the country’s biggest financial groups help the Chicago community bank. Mr Blankfein’s efforts come as Goldman responds to a barrage of negative publicity, much of it involving civil fraud charges filed against the bank last month by the Securities and Exchange Commission. Goldman has denied any wrongdoing. Under the terms being discussed, Goldman would inject about $25m into the bank and Citigroup about $20m. Other potential investors include Bank of America, Morgan Stanley, JPMorgan Chase, US Bancorp and State Farm as well as non-profit organisations that are already investors in the bank. ShoreBank said it was “expeditiously engaged” in capital-raising efforts. US Bancorp did not return calls. The other banks declined to comment. People close to the deal said there was still a chance the transaction could fall through given the looming FDIC deadline. Congresswoman Jan Schakowsky, who represents the north side of Chicago, told the FT that the bank would be saved if a deal was clinched by Monday. She said ShoreBank would be eligible for $75m in aid from the federal government if the private financing deal was agreed. If the deal goes through, it would help Goldman and the other banks fulfil their obligations under the Community Reinvestment Act, a 1977 law designed to prevent banks from discriminating against minorities and underprivileged neighbourhoods. Goldman’s CRA obligations increased after it became a bank holding company in 2008. John Taylor, the president of the National Community Reinvestment Coalition, said banks such as Goldman were under pressure to “do something good”, especially for a bank widely seen as a “favourite son” of the community banking movement. “I think people don’t want to see it go under. ShoreBank has a lot of friends,” said Mr Taylor. Randy Dennis, president of DD&F Consulting, a financial advisory firm, said: “Banks get credit under the Community Reinvestment Act for investing in a bank like ShoreBank.” ShoreBank’s reputation has helped it forge ties in political circles. During his time as governor of Arkansas, former US president Bill Clinton used the bank as a model to set up similar community banks there. The ShoreBank rescue is being facilitated by Eugene Ludwig, the former comptroller of the currency in the Clinton era, who heads Promontory Financial Group, a consulting firm.
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