Failure of Democratic Senate Candidate Alexi Giannoulias’s family’s bank, Broadway Bank, has complicated the race for President Barack Obama’s old Senate seat. the Federal Deposit Insurance Corporation seized the bank on Apr. 23. Now, there is speculation that the White House is distancing itself from Giannoulias, and Giannoulias is even using his family’s bank failure to attack Republican Senate Candidate Mark Kirk. Other reporters and politicos weighed in on Giannoulias.
“If Alexi Giannoulias pulls this one off, it’ll be one for the annals of political history: He’s trying to cast the failure of his family’s bank – which he ran as recently as four years ago and which failed Friday, the latest casualty of the bad loans in the run-up to the financial crisis — as a reason to sympathize with him and vote for him.”
– Ben Smith, Politico, “Giannoulias campaigns on bank failure”
“How much more clear does President Obama have to make it that he’d be thrilled if Giannoulias did a Jack Ryan and withdrew in order to give the party a mulligan in this key race?”
– Eric Zorn, Chicago Tribune, “Can Giannoulias Take a Hint? Evidently Not”
“I think this is something they will be flogging him with for the rest of the campaign,” said Woods Bowman, a DePaul University political science professor and former Illinois state representative. “And it’s a long time from now to November.”
– Woods Bowman, DePaul University Political Science Professor & former Illinois Legislator, Medill Reports, “Giannoulias tries to put positive spin on bank failure, but will anyone buy it?”
“Giannoulias’ claim smacks of desperation. Anyone truly looking for culprits would start with the people who ran Broadway. Most banks have been able to weather the recession. This one failed mostly because of its own mistakes.”
– Chicago Tribune Editorial, “Who’s to blame for the failure of Broadway Bank?”
“While years of risky lending schemes, hot money investments and loans to organized crime led to today’s failure, it’s a sad day for Broadway Bank employees who may lose their jobs due to Mr. Giannoulias’s reckless business practices.”
– statement from Republican Senate Candidate Mark Kirk’s campaign, Chicago News Cooperative, “F.D.I.C.’s Seizure of Senate Candidate’s Family Bank Further Complicates an Illinois Race”
“You forced one candidate out for lieutenant governor, because you didn’t like his profession or his personal life. It’s really interesting, it’s just very interesting how people go through a primary, and say, ‘You have to step aside because we don’t like what happened.’”
– Mayor Richard Daley, Chicago Tribune, “Daley Says Giannoulias Should Remain as Senate Candidate”
What Alexi said:
“I’m not comparing my situation to anyone else’s. I’m very fortunate and I realize that. But I have a new perspective on just how tough it is out there for so many people and that’s what’s going to make me fight even harder.”
– Democratic Senate Candidate & Illinois Treasurer Alexi Giannoulias, Chicago Tribune, “Bank failure a nail in Giannoulias’s campaign”
“It’s quite likely that the bank will fail. I hope I’m wrong. I hope they can raise the capital to keep the bank going and they’re fighting hard to do so but it’s tough out there for a lot of banks of which Broadway Bank is not immune to these same challenges.”
– Giannoulias, Chicago Tribune, “Giannoulias seeks to blunt damage, says family bank likely to fail”
“People are disheartened and disgusted with politics, especially in Illinois, where there’s a black eye in Illinois politics — scandal and corruption and pay to play, which is why we need fresh leadership.”
– Giannoulias, Chicago Tribune, “Alexi Giannoulias officially in the Senate race”
|Alexi Giannoulias Fact Sheet|
|Born: March 16, 1976 (34 years old)
Education:Boston University (Bachelor of Arts, Economics)
Tulane University Law School (Juris Doctor)
Marital Status: Engaged (Fiancee: Tara Flocco)
Political Affiliation: Democrat
Occupation: Illinois State Treasurer, elected in 2006
Previous Occupations: Professional basketball player in Greece (Panionios B.C. Greece)
Vice President of Broadway Bank in Chicago’s Edgewater community
Board of Directors of the Community Bankers Association
Alexi Giannoulias burst onto the political scene in 2006 when he was elected Illinois State Treasurer at the age of 30. Once a promising, fresh face for the Democratic Party, he is now fighting to save his political career after the collapse of his family’s business, Broadway Bank, amid questions about the bank’s ties to criminals. Giannoulias touted his role as Broadway Bank’s chief loan officer when he ran for State Treasurer. But now the Democratic nominee’s banking credentials threaten to derail his campaign for the U.S. Senate seat formerly held by President Obama.
Broadway Bank’s Collapse and Giannoulias’ Response
On April 23, Broadway Bank was seized by the FDIC after the bank failed to raise $70 million in capital assets. The four branches are scheduled to reopen under MB Financial Bank, according to the Chicago Sun-Times.
“[The Giannoulias campaign] knew this was coming and they knew it would be damaging,” Chicago Reader Political Reporter Mick Dumke told Chicago Loopster. “They’d been preparing for months.”
Giannoulias’ campaign has tried to soften the political blow by releasing a television ad that casts Broadway Bank as another hapless victim of the Great Recession.
Josh Brown, an student activist who supports Giannoulias, said that unlike national banks Broadway Bank never received federal bailout funds and is one of 57 community banks nationwide that have closed this year.
Opponents Highlight Ties to Crime
Giannoulias’ opponents, however, blame the bank’s failure on irresponsible loans to crime figures, citing newspaper reports.
The Chicago Tribune alleged that Broadway Bank loaned a pair of Chicago crime figures, Michael Giorango and Demitri Stavropoulos, about $20 million in 2004 while Giannoulias was a senior loan officer. Stavropoulos was convicted for running a multistate bookmaking ring and began a two-year sentence in 2005 while Giorango has felony convictions on bookmaking and prostitution promotion.
Additionally, the Sun-Times reported that Broadway also loaned $10.9 million to convicted influence peddler Tony Rezko, $9 million of which the bank has received back.
Giannoulias said he may have been involved in servicing those loans, but noted that he has not accepted campaign contributions from Rezko. Giannoulias charged his Republican opponent, Rep. Mark Kirk, with accepting money from Rezko, who is also known for dubious connections to President Obama and former Gov. Rod Blagojevich.
Conservative talk show host and writer Guy Benson called Giannoulias a “corrupt, opportunistic lightweight” and said that the young politician’s limited work experience was not necessarily positive experience.
And the National Republican Senatorial Committee released this YouTube spot spoofing Giannoulias’ career with a scene mimicked mobster television series The Sopranos.
Giannoulias and his campaign have attempted to brush the loan scandal aside.
“The truth of the matter is when you have a bank with thousands of customers, it’s easy to cherry-pick a few and go back in time and say I wish we wouldn’t have done business with these individuals. … That’s not how the real world business model works, unfortunately,” Giannoulias told the Tribune.
The Political Fallout – Can Giannoulias Still Win?
Observers remain skeptical of attempts to whitewash Giannoulias’ connection to Broadway Bank. David Yepsen, former political columnist and director of the Paul Simon Public Policy Institute at Southern Illinois University called the bank’s failure a “serious blow” which would plague Giannoulias throughout the campaign.
Giannoulias lags behind opponent Kirk in polls, 46 to 38 percent, and Democrats may decide to abandon him in favor of a candidate with a better shot at keeping Obama’s former Senate seat in Democratic hands.
But Dumke told Chicago Loopster that voters will likely be more focused on the economy and jobs in November than on the collapse of Broadway Bank. A Rasmussen poll released April 30 showed that 49 percent of Illinois voters said the Broadway Bank issue is not important at all in terms of how they will vote this November.
“I wouldn’t rule him out,” Dumke said. “It’s a long time until the election. Six months is an eternity in politics.”
Across the country, many school systems have designated “turnaround schools,” which means that the schools remain open but new staff is hired.
As of 2009, 12 Chicago Public Schools were designated turnaround schools: Charles S. Deneen Elementary School, as well as George W. Curtis Elementary School on Chicago’s South Side are two of them. Both schools are currently trying to fill multiple positions.
However, other schools aren’t so lucky and are forced to close because of low enrollment or because of consistently low levels of academic performance. Schools also closed because of underutilization of the school’s space, the conversion of schools to charter schools and a building’s poor physical condition. Since 2001, CPS has closed 44: Twenty-six closed because of low enrollment and poor academic standing.
For Andy Smarick, a visiting fellow at the Thomas B. Fordham Institute and adjunct fellow at the American Enterprise Institute, school closures makes economic sense, as he compared ailing schools to other failing industries.
“The surprise and shame is that urban public education, unlike nearly every other industry, profession and field, has never developed a sensible solution to its continuous failures.” Smarick wrote in The Turnaround Fallacy.
“After undergoing improvement efforts, a struggling private firm that continues to lose money will close, get taken over, or go bankrupt. Unfit elected officials are voted out of office. The worst lawyers can be disbarred, and the most negligent doctors can lose their licenses. Urban school districts, at long last, need an equivalent.”
According to the study, “When Schools Close: Effects on Displaced Students in Chicago Public Schools,” authors found that after schools closed, displaced students enrolled in equally underperforming schools.”
In fact, 40 percent of displaced students enrolled in schools on probation and another 42 percent of students enrolled in schools that reported some of the lowest test scores. Only 6 percent enrolled in a higher academic-achieving school. However, those students’ commute averaged 3.5 miles.
Julia Gwynne and Marisa de la Torre, both analysts at the Consortium on Chicago School Research at the University of Chicago, and authors of the study, found that keeping underperforming and underutilized are expensive to maintain and especially during CPS’s dire budget issues, resources could be better allocated to other areas of CPS.
And while parents, teachers and students protest the CPS building in droves and pack board of education meetings, Gwynne and de la Torre concluded that school closings have little affect on students’ academic performance, but addressed the merit of school closings.
Gwynne and de la Torres reported students did better when they attended a better school after their schools closed. “This also suggests that the success of a school closing policy crucially depends on a large supply of ‘better’ schools and on an intentional strategy to enroll displaced students in these schools.”
But for every school that closes, Chicago’s Renaissance 2010 initiative guarantees to establish 100 quality schools by the end of the year. Williams school closed after the 2001-2002 school year, but by 2003-2004, four new schools opened in the same building.
“Our knowledge base about improving failing schools is still staggeringly small,” Smarick wrote. “And exceptional urban schools are nearly always start-ups or consistently excellent schools, not drastically improved once-failing schools.”
Below is a map of the eight schools that will be closed, consolidated, phased out or turned around during the 2010-11 school year:
View CPS Closings For 2010-2011 School Year in a larger map
When McCorkle Elementary School closes in fall 2010, students will be sent to Beethoven Elementary School, which has a higher student-ratio but better test scores.
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Chicago Public Schools announced closings, turnarounds, phase-outs, and consolidations, which continue to draw protests from teachers, students and families.
“They’ve been talking about this for a long time, but I was thinking because we’ve made improvements, I was thinking they would try to move students in there. I was shocked when [a district official] gave me the news.”
–Frederico Flores, Principal, Peabody Elementary School
“Our parents worked hard, our teachers worked hard, our students worked hard to improve our school. “So everyone’s going to band together and try to keep our school open.”
-Frederico Flores, Principal, Peabody Elementary School
“We need to build up, not tear down the people and places where our students need to learn.”
-Marilyn Stewart, President, Chicago Teachers Union
“Do not let this blood sit on your hands. When it comes to our children, you will be held accountable.”
-Wanda Hopkins, member, Parents United for Responsible Education
“For 30 years [CPS-backed reform initiatives] have not delivered on providing a first-class education for all children in Chicago no matter where they’re coming from. We’re saying the time is now.”
-Jackson Potter, steering committee, Caucus of Rank and File Educators
“Closures are essential but they have to be part of a bigger strategy. If we close Johnson Middle, do we have enough new schools that are starting, that are close to them and will fit them well?”
-Andy Smarick, distinguished visiting fellow at Thomas B. Fordham Institute in Washington, D.C., author of the Education Next article “The Turnaround Fallacy.”
“We’re trying rebuild every community school in Chicago. That’s what you have to do. If we don’t build community schools where people firmly believe that their child can get a quality education, then we’re gonna fail as a society. That is the commitment of rebuilding school after school. And that’s what we’re doing.”
–Mayor Richard M. Daley