Washington, DC – U.S. Representative Judy Biggert (R-IL-13), a member of the Conference Committee charged with merging the House and Senate financial regulatory bills, today secured passage of an amendment that calls on federal investigators to probe the use of inappropriate political pressure by Executive branch officials to arrange the rescue of politically-favored banking institutions.  The amendment follows a recent controversy in which Administration officials allegedly pressured several of the nation’s largest financial firms into bailing out ShoreBank in Chicago.  In offering the amendment, Biggert was joined by House Oversight and Government Reform Committee Ranking Member Darrell Issa (R-CA-49).  It was accepted by House Conference Committee members by voice vote.

           “Taxpayers have a right to know whether any bank is being rescued on the basis of its merits or because of its political connections,” said Biggert, the Ranking Member of the House Financial Services Oversight and Investigations Subcommittee.  “At a time when hundreds of other banks are failing, including dozens here in Illinois, why was this bank singled out?  Americans are sick of special treatment being extended only to those with the right political friendships, and the questions raised by this deal deserve a full and fair investigation.”

            Last month, just before the Federal Deposit Insurance Corporation (FDIC) was expected to close ShoreBank’s doors, the failing bank received an injection of $150 million in capital from a handful of major financial institutions that had received government bailout funds, including Goldman Sachs and Citigroup.   With the added capital, the bank would then qualify for $75 million in additional federal aid.  According to several media reports, some of the Troubled Asset Relief Program (TARP) recipients that participated in ShoreBanks’s bailout may have been under pressure from the White House to rescue the failing firm, which had long-standing ties to the Administration.  On May 19, 2010, Biggert joined with full committee Ranking Member Spencer Bachus in sending a letter to the President demanding a copy of records related to the ShoreBank negotiations.  A second letter was sent by House Financial Services Committee members to the Special Inspector General for the Troubled Asset Relief Program requesting a formal inquiry into the matter.  To date, the White House has failed to respond.

            “Washington insiders don’t belong in the business of picking winners and losers in the financial crisis,” said Biggert.  “That’s why diligent oversight and full transparency are critical to ensuring that the taxpayers’ interests are being served -- not the interests of those with political clout.  Our amendment calls on the inspector general to look into such abuse and provide Congress with a non-biased, third-party conclusion.  It is critical that we know the truth before more taxpayers funds are put at risk.”

           Specifically, the amendment calls on the FDIC inspector general to “investigate the influence of political pressure asserted by any Executive Branch employee or appointee . . . related to assistance provided by private sector institutions or individuals to prevent the failure of a financial institution.”  It targets only cases involving failing institutions that have received “cease and desist” orders from the FDIC since January 2009, and requires the FDIC to report to Congress on its findings by October 1, 2010. 

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