Hinz: Chicago's leaders are to blame for Seaway Bank's failure
I alluded to this column in an earlier post about why Seaway died. In that post I blame a few factors that included management. Hinz' premise was that Seaway died because Chicago's leaders did little to stave it off. As of late January the Seaway Bank brand remains under the ownership of the Indian-American owned State Bank of Texas.
Some selected excerpts:
As in an Agatha Christie mystery, there are a lot of perpetrators in its demise. But in the end, no one with the wherewithal in Chicago cared enough to intervene, not City Hall or anyone in the city's still substantial black business community. And Chicago is left with a stinking corpse.I won't go over this again, re-read this post. More below:
My colleague Steve Daniels wrote about Seaway's impending demise long before it occurred. The cost of recapitalizing Seaway was relatively modest, about $25 million according to some who have looked, but it's obvious the place was a mess.
Adds another insider, "There were meaningful business issues that made it imprudent to invest" in Seaway. But, in the end, "no one in the African-American community" stepped up.
...the weakening South Side economy took a toll, as middle-income families split for the suburbs. The rise of more competition from non-minority banks cut into Seaway's business, too.So any investors looking at Seaway didn't like what they saw, and no sales pitch to bank Black at that bank made little difference. And what about Emanuel and Preckwinkle: "Some blame Emanuel for not squeezing some of his rich pals as only Emanuel can, to contribute to the cause anyhow; others insist he did what he could. Another camp points to metro Chicago's top black elected official, Cook County Board President Toni Preckwinkle. Her office declines to comment."
About a year ago, an informal group of heavy hitters assembled and started talking about what could be done. According to people who were involved, the group included black financial execs Jim Reynolds and John Rogers, community leaders James Compton and Eric Whitaker, banker Norm Bobins, and at least three people close to Mayor Rahm Emanuel: City Treasurer Kurt Summers, Deputy Mayor Steve Koch and capital manager Michael Sacks.
They came up with, well, nothing, or at least not enough to get the job done.
One person tells me the bank resisted accepting advice to spin off its still profitable foreign trade operations at O'Hare International Airport. Others say Seaway's financial condition had become so dire that investors would have had little chance of getting their money back.
Then I could add this press release by Congressman Bobby Rush after the bank failure:
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We weep at the prospect of @SeawayBank closing.We hope the recovery is on the way. pic.twitter.com/VItGbWKtZQ— Rev Jesse Jackson Sr (@RevJJackson) January 28, 2017
Just for the sake of it a the start of a twitter conversation between Kernes Media and Rhymefest. Rhymefest is a rapper in Chicago who dabbled in politics in 2011 running for 20th ward Alderman. Rhymefest had an interesting response
@KerNes_Media I'm not a part of the bank black movement because I haven't seen thier presence inhance the state of the black poor— Rhymefest (@RHYMEFEST) January 30, 2017
All the same the response publicly by some of Chicago's civic leaders haven't been good to the failure of what Hinz refers to as one of Chicago's remaining crown jewels. We need look no further than this first paragraph as to why he's paying attention:
If ever Chicago's African-American community needed a boost, it's now. Poverty and unemployment have risen to distressing levels. Homicides are so frequent they routinely make national news (and prompt a tweet from @realDonaldTrump). The city's black population is dropping year after year, falling further behind that of whites or Latinos. A community in this much pain needs to keep and build upon every asset it has left.And this is how he ends it:
Thus, a community desperate for investments and loans and the jobs and stability they bring lost an institution that was positioned to provide them, as it had for many years. Anyone could have seen this coming. Remember that the next time someone gives a big speech about fighting crime.So we see here a number of things wrong with this picture. The politicians didn't really do anything to save at one time the largest Black-owned bank in the USA. The ones who could save it likely didn't like what they saw when they were called upon to save Seaway. And we may see shockwaves from this for years to come.