A watchdog's report said the Federal Deposit Insurance Corp.'s handling of the failed ShoreBank in its final days did not indicate any undue favoritism for the politically connected Chicago bank.
The agency's inspector general carried out a second audit of the resolution, going beyond the standard failure review. The second report was in response to allegations last year by senior GOP lawmakers that Democrats in Congress and the White House tried to influence the FDIC's supervision and, later, marketing of the bank. After it was shut down in August, the bank's operations were sold to an acquirer created by former ShoreBank backers.
But in its report released March 10, the IG said it found no evidence of anything inappropriate. While FDIC officials, including Chairman Sheila Bair, had made contact with prospective investors about providing capital needed to save the bank, and the agency recommended it for federal bailouts funds meant for community development lenders, none of those steps fell outside the bounds of its authority.
"All of these actions, and others taken with regard to supervising and resolving ShoreBank, were consistent with the FDIC's broad statutory mission of minimizing costs to the" Deposit Insurance Fund "and in compliance with applicable policies and procedures," the report said. "Further, nothing came to our attention to suggest that there was any indication of political or inappropriate influence imposed on the FDIC in connection with any ShoreBank-related matters."
Even though three former FDIC board members were affiliated with ShoreBank, FDIC officials stated that "did not cause the FDIC to supervise the bank any differently," the report said.
