Author Topic: Failure Of Obama’s Pet ShoreBank Costs Taxpayers $368 Million  (Read 499 times)

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Offline bijou

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ZERO HEDGE reports

After a lengthy attempt to bail out his pet bank, ShoreBank Chicago, Illinois, which included several alleged armtwisting episodes by the administration, the president has finally let the bank die (with its assets valued at about 50% of face). Yet instead of going to hell, it was immediately resurrected with a bevy of new owners, among them Goldman, Morgan Stanley, and BofA, all of whom received nearly $400 million in taxpayer money for their “generosity” to keep the bank zombified even in teh afterlife.

Some details on the bank from the FDIC press release: “As of June 30, 2010, ShoreBank had approximately $2.16 billion in total assets and $1.54 billion in total deposits.” In other words, the value of ShoreBank’s assets was well below 70% of face, if the bank was undercapitalized at its current deposit level. Continuing: “The FDIC and Urban Partnership Bank entered into a loss-share transaction on $1.41 billion of ShoreBank’s assets. Urban Partnership Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $367.7 million.” Netting the incremental cost of taxpayer DIF subsidies, means that the real value of assets was ($1.54 billion – $367.7 million)/$2.16 billion or 54% of face. And this is a bank that Obama wanted to keep alive at all costs?  ...

Offline true_blood

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Re: Failure Of Obama’s Pet ShoreBank Costs Taxpayers $368 Million
« Reply #1 on: August 21, 2010, 10:51:48 AM »
Interesting, huh?!?!
He or his cronies might have some stake in it. Otherwise, they would have let it fail, just like over a 100 of banks which had already for this year.