Cusco If ACORN represented the “gold standard in advocacy,” as I once heard a Gates Foundation program officer say to me about the work of New Orleans ACORN post-Katrina, then South Shore Bank in Chicago held a similar position in the community development world. One of our old friends from Little Rock, Bob Nash, who had worked for the Winthrop Rockefeller Foundation there had done a turn as vice-chairmen at South Shore. South Shore was a darling of foundations and an ally in the 1977 passage of the Community Reinvestment Act, where we were also active. As a matter of politics and politic, when I was at ACORN we always kept a little money there in solidarity.
All of which made it shocking to read in the Wall Street Journal that the bank was on a life-support deadline at the end of this week to raise $125 million in capital or be taken over by the Federal Deposit Insurance Corporation (FDIC). Don’t tell me that both ACORN and South Shore could go down in the same year!
The article was pitched more at the sudden change of mind by Goldman Sachs who at the last minute was reportedly putting in $20 million to help close the gap needed by the bank and its blue ribbon friends and supporters after having passed on the deal earlier. Predictably Citi, Bank of America, and JP Morgan Chase were already in the play.
The bank blamed its problems on the impact of the recession on its lower income and middle income borrowers.
Goldman and its executives were probably wincing while reading, even though they had wisely declined comment, since they have abundantly proven that almost every time they open their mouth, they insert foot, the comments made by the head of the Illinois Finance Agency who has been helping in the salvage effort:
Bill Brandt, chairman of the Illinois Finance Authority, a state economic development entity, says Goldman agreed to join the consortium within the past few days. “I’m told that Mr. Blankfein … has used his good offices to try and further this deal. … I’m told this was just within the last few days,” Mr. Brandt said. “I know that Mr. Blankfein and his marvelous organization have been much in the news of late, and I can sympathize with their desire to change the narrative.”
Maybe a classic example of doing the right thing for the wrong reason, or it could be just doing the right thing for a change. If so, there’s a long list of “do right” things that I would like to suggest for Goldman to start doing. I would keep writing, but I think I’ll go make my Christmas list starting with foreclosure modifications while preparing for Machu Picchu on Sunday.