ShoreBank Bailout His Political Snag

The Chicago Tribune reports:

The bailout of Chicago-based ShoreBank has hit a serious snag as the Federal Reserve and Treasury drag their feet on whether to provide funding to the ailing South Side lender, sources close to the situation say.

Last month ShoreBank lined up commitments from private sources, including Goldman Sachs, Bank of America, General Electric and Chase, for a capital infusion of about $135 million. That private money was to have made ShoreBank eligible for about $75 million in government funds from the Treasury’s Troubled Asset Relief Program. The bank has needed to raise about $200 million to stave off possible seizure.

The use of federal dollars to bail out ShoreBank, which prides itself on helping hard-hit areas, has provoked a backlash in the last month from conservatives and others concerned about the use of tax dollars for bailouts.

An attendee at a recent protest in Chicago over the ShoreBank bailout made the point that Park National Bank, which was also active in the community, was allowed to fail. Some have also called for congressional inquiries into the ShoreBank bailout.

Snag.