General Electric Co. has committed to pump about $20 million into ShoreBank, providing the last amount of capital needed to keep the ailing South Side community development lender from failing.
Discussions that went into the wee hours last night finally produced an agreement among a who’s who of Wall Street banks and a group of local lenders that will provide about $140 million of private capital to rescue ShoreBank, a person familiar with the matter said.
That will enable ShoreBank to tap up to $75 million in bailout funds from the Treasury Department. The Federal Deposit Insurance Corp. had prepared to seize ShoreBank, which lost more than $100 million last year due to huge losses from real estate loans in its low-income neighborhoods, but held off as the extraordinary private-sector rescue effort gained momentum.
Local financial services firms participating with smaller contributions include Northern Trust Corp., State Farm Insurance Cos. Harris N.A. and PrivateBancorp Inc.
A ShoreBank spokesman said the bank isn’t commenting but may make a statement later today. A GE representative wasn’t immediately available.
Dispatches from Chicago's south side.
Tuesday, May 18, 2010
ShoreBank saved; $20M from G.E. puts bank over the top
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