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United States News Title: FDIC Seizes ShoreBank; Reinstalls Failed Management (Obama Protects Friends-Corruption Personified) FDIC Seizes ShoreBank; Reinstalls Failed Management Submitted by Paul Chesser on Mon, 08/23/2010 - 17:12 Shorebank logoOn Friday the Federal Deposit Insurance Corporation momentarily took over politically-connected ShoreBank, just long enough to relieve it of some of its woes and then turn it back over to the same people to continue its same failed mission. According to a press release, the FDIC Deposit Insurance Fund will take a $367.7 million hit in the transaction. Looks like FDIC chairman Sheila Bair succeeded in her pursuit to save her baby. The Wall Street firms she reportedly pressured to help save ShoreBank – Goldman Sachs, Bank of America, JP Morgan Chase, Morgan Stanley, and General Electric, among others – are all investors in the new ShoreBank, which will now be called Urban Partnership Bank. Roughly the same amount of capital -- $140 million – that had been raised from those financial institutions for the purposes of winning TARP funds will instead back the new venture. FDIC calls Urban Partnership Bank a “newly chartered institution,” and says this coalition was “the only bidder” for ShoreBank’s “good” assets. Big surprise, since no one in their right mind would – without pressure from the government agency that regulates them – have put this turkey on their books. But FDIC’s love and sympathy for ShoreBank showed through in the supplemental fact sheet it issued Friday about the transaction: ShoreBank is a unique kind of institution - one that is mission-driven and focused on a double-bottom line. Community Development Financial Institutions (CDFIs) in this credit environment are particularly focused on the needs of the residents in their community and rely on their philanthropic partners to enhance their ability to serve their community. ShoreBank was the largest CDFI in the country and as such, presented unique marketing challenges. A quaint thought from Bair’s FDIC, but there is no such thing as a double- (or triple-, quaduple-, etc.-) bottom line – not that matters, anyway. If you cannot show a bottom line of profitability, or at least survivability, you fail – period. An abidance to any other corporate goal will not save your behind – at least, not unless your political connections extend you a life preserver. But that violates free markets by rewarding failure. As I wrote two weeks ago, it should have been ShoreBank’s ideological soulmates (and investors) – Ford Foundation, John and Catherine MacArthur Foundation, and the Joyce Foundation – who should have come to its rescue. They were the believers, with billions of dollars in assets, in that “other bottom line” of progressivism in lending. Ford and MacArthur are part of the Urban Partnership investment team, but are only two of the fifteen listed in the coalition. The rest are mostly financial institutions, publicly traded, whose shareholders ought to be outraged that their executive leaders agreed to take this on. I doubt the progressive ideologues have much skin in the game. And finally, ShoreBank’s “green” investment arm was saved also, as fellow community development institution OneCalifornia Bank will purchase ShoreBank Pacific. The Oakland-based mom-and-pop lender claims to have a “Triple Bottom Line,” which they say means they can meet “our social mission goals while operating in a safe, sound and sustainable manner.” For these institutions “sustainability” is a code word for “needs government subsidies,” because their alternative energy schemes can’t survive without it. Watch for both OneCalifornia Bank and Urban Partnership Bank to look for more help in the not-too-distant future, as their other bottom lines continue to take down the one that really counts. Paul Chesser is an associate fellow for the National Legal and Policy Center. Poster Comment: Unfuckingbelieveable. The Obama Administration is THE MOST CORRUPT IN THE LAST 100 YEARS.
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