Obama-Rev. Wright Linked Shorebank Bank Settles With FDIC. The Bank for Democrat Politicians and Crony Capitalism

Crain's Chicago Business reports:

The Federal Deposit Insurance Corp.'s negligent-lending lawsuit against former officers of defunct ShoreBank has ended in a $17.3 million settlement.

The settlement is the largest to date of any of the numerous lawsuits the FDIC has brought against directors and officers of failed local banks since the financial crisis and Great Recession took down nearly 50 area banks. The FDIC originally sought $73 million in its August 2013 lawsuit against five former ShoreBank executives, alleging reckless lending practices that helped lead to the Chicago bank's 2010 demise.

The Oct. 28 settlement, posted yesterday to the FDIC's website, didn't specify who is paying the money and how much each is contributing. But it's likely that most if not all of the cash is coming from St. Paul Mercury Insurance Co., a unit of New York-based Travelers.

In 2014, St. Paul sued the FDIC and the ShoreBank defendants, asserting that it shouldn't be obligated to cover claims because coverage for the bank's officers had expired before the bank filed any claims with the insurer. The parties agreed to have the suit dismissed on Nov. 13.

An attorney for four of the five ShoreBank defendants declined to comment. An attorney for St. Paul didn't respond to a request for comment.

The settlement, while larger than any other locally, will barely dent the FDIC's exposure in ShoreBank's failure. It's projected to cost the FDIC's insurance fund $487 million, according to the agency's most recent estimate, dated Dec. 31, 2014.

Though one of dozens of local banks that didn't survive the recession, ShoreBank's failure was higher-profile than most. With a national reputation for profitably lending in low-income neighborhoods other banks avoid, ShoreBank was the object of a highly unusual rescue campaign, encouraged by the FDIC itself.

A Who's Who of the nation's largest financial institutions, including Goldman Sachs, JPMorgan Chase, GE Capital and Bank of America, contributed $140 million to recapitalize the $2 billion-asset bank. But it wasn't enough to save ShoreBank, and the equity instead was injected into Chicago-based Urban Partnership Bank, newly created at the time to carry on ShoreBank's legacy.

Hot Air has the sleazy background on ShoreBank.