Alexi Giannoulias: He's Just Like Us | Bleader

Alexi Giannoulias: He's Just Like Us


Sign up for our newsletters Subscribe


Alexi Giannoulias has been running an ad that attempts to make the lemon that was Broadway Bank into the lemonade of electoral triumph:

Sorry, that's not it. Here you go:

It's pretty disingenuous for Giannoulias to say "when I left over four years ago, it was in good shape." He left while pumping money into the housing market was profitable, and the bank blew up because it was overleveraged in the construction market:

But there was at least one additional factor: risk tolerance. Broadway's growth and profits were fueled largely by its rapidly expanding business in issuing loans for new real estate development. Traditionally lending for construction and development (known in the industry as C & D) has been seen as a bigger gamble than lending for, say, existing homes or small businesses, since a relatively high number of plans for new hotels, condos, housing developments, office complexes, and the like end up flopping. In the early to mid-2000s, though, as the soaring real estate markets drove the national economy, many lenders downplayed the risk and dived in.

And he's actually said as much: "In an interview this week, he took some responsibility for a disastrous expansion of real estate lending when he was senior lender at Broadway in the mid-2000s, before winning election as Illinois treasurer in 2006."

But on the rest of the ad, I agree with Alexi. He really is just like us, or at least a lot of us, from Main Street to Wall Street.

What's really remarkable about the collapse of the housing market, and with it the near-collapse of the economy as a whole, is how similar the behavioral patterns are from the lowliest no-doc borrower to the Gordon Gekko All-Stars at the top of the system. Borrowers took on risks they couldn't afford, whether it was to buy a house to live in, to use their houses as ATMs with new mortgages, or to play the housing market. Mortgage shops were more than happy to sign them up for generous fees. Banks were more than happy to provide the dough. Bigger banks took the loans, chopped them up, and served them to investment banks, which sold them to pension fund managers (like Oppenheimer, which torched the Bright Start fund). Ratings agencies became more willing to call shit Shinola and to disappear the fussbudgets who might have argued otherwise.

The Giannoulias family was a small part of a grand delusion. It's their fault, and it's Alan Greenspan's fault, and it's Phil Gramm's fault, and it's Robert Rubin's fault, and it's AIG's fault, and it's our fault as debtors (and voters). That's the flip side to Giannoulias's syrupy ad: we are all in this together, and it's not a wonderful life.

Comments (5)

Showing 1-5 of 5

Add a comment

Add a comment