Billionaire Democratic gubernatorial hopeful J.B. Pritzker is making a $1 million deposit in Chicago’s last remaining black-owned bank.
Illinois Service Federal Savings is the beneficiary. Pritzker alluded to the investment earlier this week in an interview on WVON radio without naming the bank, but his campaign confirmed the recipient.
The Pritzker campaign said the deposit is part of Pritzker’s commitment to improve economic conditions in hard hit communities and neighborhoods.
“JB has made expanding access to capital for small business and entrepreneurs, and making investments in the communities hardest hit by Bruce Rauner’s failed leadership and manufactured budget crisis a top priority for him as governor,” a spokesman said in an email.
A spokeswoman for the Rauner campaign responded by referencing the Pritzker family’s management and ownership of Superior Bank, a subprime lender that failed in 2001. The failure cost the Federal Deposit Insurance Corp.’s insurance fund $287 million.
Without implicating J.B. Pritzker in the management of Superior, the spokeswoman said in an email that Pritzker’s $1 million deposit is “a drop in the bucket (compared) to the hundreds of millions Pritzker made peddling subprime loans to minority communities, while costing the taxpayers $300 million and ordinary depositors their savings.”
The Pritzker campaign returned fire with an old banking mess tied to Rauner’s old firm, GTCR. A GTCR-held mortgage lender, HomeBanc, collapsed in 2007 with 1,100 losing their jobs. GTCR unloaded the stock just before the slide.
The campaign accused Rauner of distracting “from the fact that throughout his business career and his time as governor working families have paid the price for his failures.”
For all the jabs back and forth, Pritzker’s deposit echoes a similar action by Rauner in 2014 as he challenged then-Gov. Pat Quinn. Rauner deposited $1 million in a South Side credit union as a way of demonstrating the Republican private-equity magnate cared about black communities and winning at least some black votes.
In both cases—Rauner’s and Pritzker’s—the institutions are small, and the sums of money very large.
When Rauner made his splashy announcement, the CEO of South Side Community Federal Credit Union in Washington Park was quoted as saying he wasn’t totally sure what to do with all that money. That didn’t mean he wasn’t glad to accept it.
The same may well be true at Illinois Service, which was unaware of Pritzker’s plans before a reporter called with the news.
An obscure thrift based for decades in Chicago’s Bronzeville neighborhood, Illinois Service nearly failed before a Ghanaian-American family rescued it a year ago with a $9 million recapitalization.
With the failure earlier this year of higher-profile Seaway Bank & Trust, Illinois Service emerged as the only black-owned bank left in Chicago, a city that once boasted several.
The bank as of March 31 had nearly $100 million in deposits. But it had less than $40 million in loans outstanding, illustrating how challenging it can be to make loans in many of the South Side’s economically distressed neighborhoods.
In a statement, Illinois Service President Robert Klamp said, “Any focus on community investments and small business growth should be a priority for the state.”
Illinois Service posted a $3.8 million loss last year but swung to profitability in the first quarter of 2017.
The Pritzker campaign said the deposit was part of a broader effort to revitalize minority neighborhoods, an initiative it unveiled when announcing the endorsement of Chicago Treasurer Kurt Summers.
But, within the Democratic Party where Pritzker’s wealth has become an issue, the move may well prompt questions. Rauner was accused of “buying votes” when he made the audacious deposit in the credit union.
Will Pritzker’s challengers, some of whom lack the personal wealth to make $1 million deposits, raise similar concerns, given the importance of the black vote to winning the nomination?