Shorebank Goes the Way of Lehman Brothers…(GS)

…No, not bankruptcy; rather Charlie Gasparino is reporting on Fox Business Network that the bank may be broken up into a “Good Bank-Bad Bank.” While this sounds eerily similar to another troubled firm with toxic assets on its balance sheet, given Shorebank’s size and backing by the FDIC, this plan may actually work. Mr. Gasparino said, “The fate of Shorebank continues to linger. One of the plans on the drawing board is a breakup of Shorebank into what’s known as a ‘good bank’ or a ‘bad bank.’ Basically taking the bad bank; the subprime loans, all the faulty lending out of the good part of the bank, some of the businesses they consider good. The FDIC would take this bad bank stuff over while the better part of the firm would be able to survive.” Some people, myself included, may be asking why this bank is receiving special treatment, Charlie said, “Sources close to the negotiations say it’s a face saving measure. The Wall Street firms at this point do not want to pony up any more money to bail out Shorebank. If they don’t give any more money, it’s hard to capitalize this where it remains solvent. The Fed has said the amount of money on the table right now, close to $225 million dollars in bailout money, is not enough.” He added, “It’s an admission that this bank should have failed. Politics aside, there is no way if this bank did not have close ties to the Obama administration would Wall Street have gone out of its way to bail it out. And they did not do it because they knew it had ties, they were prodded by the FDIC. Wall Street firms told me a lot of political pressure was used. Valerie Jarrett’s name, Senior Advisor to the president, was thrown about in these meetings plenty of times trying to get the Wall Street guys to give money. Valerie Jarrett has ties to this bank. Amid all the troubles Goldman Sachs GS was facing a couple months ago Lloyd Blankfein was on the phone making calls to his fellow CEO’s to bailout Shorebank.”