The South Side lender, which will fail without hundreds of millions in fresh capital, obtained commitments for about $150 million, well above its $125-million target and previously reported sums.
But the $2-billion-asset bank, which gained a national reputation for lending in low-income city neighborhoods that other banks avoid, needs a $75-million companion infusion from the recently reworked Troubled Asset Relief Program in order to comply with regulatory capital requirements.
A June 15 deadline for an answer from the Treasury Department, which administers TARP, came and went, so the private consortium that made the $150-million commitment agreed to a one-week extension.
Sources say the Federal Reserve appears to have taken the lead from Treasury on whether to back the TARP request, as reported first by the Chicago Tribune’s Web site.
“It’s not going as quickly as we’d like, but we’re working through it,” a ShoreBank spokesman said.
The ShoreBank bailout has turned into a political hot potato.
It ran into a buzzsaw late last month on Capitol Hill, with top Republicans on the House Financial Services Committee requesting information from the White House on any communications regarding ShoreBank’s predicament amid speculation that Goldman Sachs Group Inc., Citigroup Inc. and the other banking giants that came to the little bank’s aid were doing so at the behest of the Obama administration.
The administration has denied any involvement in the ShoreBank rescue.
The Obamas know ShoreBank’s founders, as they all lived in Hyde Park before Barack Obama won the presidency.
Even with the federal funds, there have been questions on whether ShoreBank would have enough capital to survive long-term, given the severity of its loan-quality problems. People familiar with the matter says the bank’s leadership doesn’t intend to ask private investors for more help now.