IL: ShoreBank scrambles for needed cash

Wall Street firms looking to bail out the troubled community lender ShoreBank Corp. have yet to come up with the approximately
$125 million needed to prevent a possible government takeover, FOX Business has learned.

This is the most recent development stemming from an early afternoon meeting among executives at several big banks, including
Goldman Sachs (GS), Bank of America (BAC),
JPMorgan (JPM), and Citigroup (C).
According to one person with knowledge of the meeting, the banks have commitments for “a little more than $100 million,” thus
raising the possibility that the deal to raise $125 million might not be reached by the end of the day, and that ShoreBank
might be taken over by the FDIC.

Goldman Sachs, which faces numerous federal probes into its business practices, has been leading the still-elusive effort
to convince Wall Street firms to raise enough money to save the Chicago-based bank, which specialized in making loans in low-income
communities. Several executives at Wall Street firms say they are facing some political pressure to bail out the bank from
Washington.

As the banks scramble to raise the necessary money to bail out the bank, they’re also receiving some last-minute support
from Morgan Stanley (MS). Like Goldman, Morgan Stanley is facing
scrutiny over its business practices and, also like Goldman, Morgan Stanley has agreed to put money into the save ShoreBank
pool, FOX Business has learned. It’s unclear if Morgan’s role can raise enough money to save the bank; Morgan has tentatively
agreed to donate between $3 million and $5 million. People close to the discussion say the bank may need as much as $300 million
to survive. So the consortium could still be several hundred million dollars short.

ShoreBank has ties to the Obama administration; Valerie Jarrett, President Obama’s senior adviser and a fixture in Chicago
politics (as was the president), served on the board of Chicago Metropolis 2020, a civic organization which was run by Adele
Simmons, a director at ShoreBank. 

A spokeswoman for Jarrett says she “has not met with or made calls for ShoreBank regarding support measures.”

People with knowledge of the bailout measures say it’s unclear if the FDIC will announce its takeover of ShoreBank later
this afternoon, when it regularly announces bank closings. Rather, the consortium will meet over the weekend to attempt to
raise the additional money, these people say.

One problem some of the Wall Street firms have is that it’s unclear whether the $125 million will be enough to save the
bank. Some of the firms believe that the accurate number is closer to $300 million. 

“I know it doesn’t sound like a lot of money, but when you don’t know the size of the hole, you just start throwing good
money after bad,” said one banking executive with direct knowledge of the bailout.

Brian Berg, a ShoreBank spokesman, said the bank had no comment on the report.

Read the original article from Stateline.org.