Please also see these other posts in our Shorebank series: ShoreBank, Sharia Law, and Bank Bailouts; ShoreBank’s Evolution from Community-Based Banking to the Microfinancing Arena; ShoreBank: The First Green Bank; ShoreBank: A Key to Green Jobs; and ShoreBank: Too Green to Fail?
The Shorebank story is quite complicated and filled with literally hundreds – if not thousands — of individuals who have been in some way involved in the unfolding of an intriguing saga. It has been difficult to narrow down the field of characters in order to focus on just a few. Some of the names are familiar, and some are relatively unknown (except, perhaps, within the context of their own circles of influence).
The original founders of Shorebank probably didn’t dream that this bank would have the worldwide influence that it now has. They were all very active in their communities and had a desire to see the South Shore neighborhood re-built to its former state of safety and community life. The neighborhood had suffered economically and was becoming run-down and plagued by crime. Their hope was to re-invest and re-enliven this neighborhood of Chicago. They made loans towards the renovation of many of the buildings which were deteriorating and in disrepair. They also invested in new building projects to benefit the residents of South Shore.
For 30-plus years Shorebank has seen its founders’ dreams realized; and beyond those dreams, Shorebank has become the catalyst for international financing — especially that directed toward low-income people in many countries of the world. The Community Reinvestment Act, passed into law in 1977 during President Jimmy Carter’s term of office, encouraged financial institutions to make loans to low-income borrowers. Ron Grzywinski (one of the original founders of Shorebank) was the only banker to testify before Congress in support of the Community Reinvestment Act. Its passage was instrumental in paving the way for Shorebank’s success. The bank steadily grew financially and facilitated the renewal of poverty stricken areas through the rest of the 1970’s and early 80’s, catching the attention of then-Governor Bill and Hillary Clinton of Arkansas (in fact, according to the IFA, Bill is still advocating on behalf of ShoreBank).
Because Shorebank was lending to run-down neighborhoods, the Clintons , along with Shorebank, decided to establish the Southern Development Bancorporation in Arkadelphia, Arkansas in 1988. They hoped that the poor in Arkansas would be helped by the loans they could obtain. Hillary’s former roommate at Wellesley College, Jan Piercy, joined Shorebank in 1984.
In this video, Hillary Clinton speaks (in September 2008) about Shorebank. The “Ron” she refers to is Ron Grzywinski, one of the founders of Shorebank (founded in 1973).
Lets look closer at some of the other key players:
From Shorebank’s website:
“In 1973, Ron Grzywinski, Mary Houghton, James Fletcher and Milton Davis purchased a failing bank in a declining and disinvested neighborhood on Chicago’s South Side. They set out to demonstrate that banks can be powerful tools for creating positive social and community change.” read entire article here>>>
Below is a picture of the 4 original founders of Shorebank (I have seen articles numbering the founders at only 3 as well as one article that spoke of an anonymous founder named Stanley Hallett, now deceased). In any case, this is the picture that can be found on ShoreBank’s website.
The leading roles in the Shorebank story must go to Ron Grzywinski and Mary Houghton. Ron and Mary Houghton were both employed at Hyde Park Bank when they decided to purchase the former South Shore Bank in 1973. Both very much community activists, they did not want to see the bank moved to the Loop in Chicago. Both of them served on many community organizations geared towards a progressive view point. Ron was instrumental in getting the Community Reinvestment Act passed by Congress. He was the only banker to testify before Congress to support the legislation. Ron was also the founder of the Center for Neighborhood Technology.
As one of the founders of Shorebank, Mary Houghton has been one of the motivating forces for the promotion of lending to lower income clients for the purpose of social change. She also has been very involved in community activism and has served on many organizations. As a recognition of their hard work, both she and Ron Grzywinski have received numerous awards.
Jan Piercy was Hillary Clinton’s former college roommate.
From Jan’s biography on the ShoreBank website:
“Jan rejoined ShoreBank in 2005 after over a decade of being away to work on developing a talent pool for Presidential appointments during the last stages of President Clinton’s first Presidential campaign. In addition, she served on the President’s White House staff before being nominated to become the U.S. representative on the board of the World Bank. She was confirmed by the Senate in 1994 and served for 7 years as the bank’s U.S. Executive Director, chairing the Board Personnel Committee and the Committee on Development Effectiveness, and also serving on the Audit Committee. As an Advisor to ShoreBank between 2002 and 2005, she was the lead member of the team that raised $28.8 million in capital to establish ShoreCap International. Jan was previously Senior Vice President at ShoreBank in the early 1980’s. Jan is on the Advisory Councils of the Acumen Fund in New York and the Global Philanthropy Forum in San Francisco, and the boards of Vital Voices and Women Advancing Microfinance. She is a member of the Council on Foreign Relations.”
Another key player at Shorebank is Robert Weissbourd. He joined the banking firm in 1990 as Vice-President. He progressed up the ranks to Executive Vice-President by 1997. In 2000 he formed a consulting firm named RW Ventures, LLC. He currently serves as President of that firm.
According to RBO>>>>
“He has been active for over twenty-five years in community and civic organizations, including service as President or Vice-President of the Boards of City Colleges of Chicago, Crossroads Fund, Businesspeople in the Public Interest, the Center for Neighborhood Technology and PROCAN, as well as on the Visiting Committee of the University of Chicago Law School, and the Advisory Committees for the (Chicago) Mayor’s Technology Advisory Committee, Brookings Metropolitan Economy Project and Brookings Urban Markets Initiative.” (emphasis added)
The organization Businesspeople in the Public Interest (BPI) received $375,000 in grants from the Chicago Annenberg Challenge during the time that Barack Obama was Chairman. Weissbourd was a great supporter of Barack Obama during his campaign for US Senate in 2003-2004. He also was a part of the Obama-Biden transition team.
Adele Simmons is currently Director at Shorebank. She was President of the John D. and Catherine T. Macarthur Foundation from 1989 to 1999. She has been and is still active in a multitude of organizations too numerous to list here. To see an interactive map of her associations, click here to go to Muckety.com>>>
Howard Stanback is presently on the Board of Directors for the Shorebank Neighborhood Institute. He has also previously served as President of the Hyde Park Community Association and is a former Board Chairman of the Woods Fund. Before joining Shorebank he was employed by the New Kenwood LLC, a real estate development co-owned by Allison Davis (Barack Obama’s former boss at the Davis, Miner, Barnhill Law Firm) and Tony Rezko. He and Barack Obama previously served together on the board of the Woods Fund.
Barack Obama has several connections to Shorebank:
His wife Michelle Obama grew up in the South Shores neighborhood of Chicago where Shorebank first began.
He served on the Woods Fund board along with Board Chairman Howard Stanback, who is currently head of Shorebank’s Neighborhood Institute.
He also was chairman of the Chicago Annenberg Challenge (CAC) during the time that Business People for the Public Interest (BPI) was approved for $375,000 in grants. Ron Weissbourd, former Exec VP for Shorebank was serving on the board of directors for BPI during the same time period.
During the 2008 Presidential campaign, while still a Senator from Illinois, Barack Obama visited Kenya, the former home of his biological father. He promoted the application of microfinancing (an activity for which ShoreBank has been a major promoter) as a way to fight poverty world-wide. Chicago’s Shorebank donated $1 million to Kenya and also assisted in setting up financial institutions in Kenya and many other locations throughout the world.
Another significant connection between Obama and Shorebank is the fact that his political campaigns (both IL Senatorial and US Presidential) were very generously contributed to by its staff.
Although connections between ShoreBank and George Soros are not direct ones, Mr. Soros has been very involved in promoting microfinancing as a viable avenue for bringing about social/economic change. In an April 2004 article in Investment News>>>
George Soros is quoted regarding microfinance:
“I believe there is a market of socially conscious investors, be it foundations or individuals, who would invest in microfinance if they knew where to go,” he said. Mr. Soros is the founder and chairman of a group of foundations in more than 50 countries and chairman of Soros Fund Management LLC in New York.
“Right now, microfinance is tiny compared with the market that needs to be served,” he said. “The real challenge is to figure out how to bring [microfinance] to the macro level. Just lending money alone won’t lead to a scaling up.”
Mr. Soros asked the council’s members if they would consider marketing their funds:
“The funds as a group right now could benefit from some marketing,” he said. “The council could provide a menu of different funds to choose from, and the [potential investors] would have the assurance that they were dealing with viable funds because they would all be members of the council.”
Council members were divided over whether they were ready for such a move.
To view an interactive map of George Soro’s associations click here to go to Muckety.com>>>>
Mr Soros was a major contributor to Barack Obama’s campaign.
Other familiar names with ties to ShoreBank — Jeremiah Wright and Van Jones:
Of possible interest to readers is also the fact that ShoreBank was the institution that financed the loan to Trinity United Church of Christ (Jeremiah Wright’s church) for Jeremiah Wright’s $1.6 million retirement home and a $10 million line of credit for Trinity United.
Shorebank has recently experienced major financial losses prompting federal regulators to issue a “cease and desist” order. Until the situation is resolved (by raising more equity), the order will remain in effect.
From ChicagoBusiness.com>>> on Dec 11, 2009:
ShoreBank co-founders Ronald Grzywinski and Mary Houghton, who’ve led one of the country’s most high-profile community banks for more than three decades, are easing out of their leadership posts, the bank announced to employees today.
Mr. Grzywinski, 73, and Ms. Houghton, 68 — he’s chairman and she’s president of ShoreBank Corp., holding company for the $2.5 billion-asset Chicago bank — are passing leadership of the holding company to George Surgeon, the ShoreBank veteran who was named CEO of the bank in early November. Mr. Surgeon, 59, will become president and CEO of the holding company at the end of April, when the co-founders will become co-executive chairs of the holding company.
See related story: “Saving ShoreBank”
At the end of 2010, the board will select a new chairman to succeed Mr. Grzywinski and Ms. Houghton. They will remain board members.
In Friday’s letter to employees, Mr. Grzywinski wrote that he and Ms. Houghton next year “will continue to focus on raising capital and providing oversight of ShoreBank Pacific, the international companies and all the non-profit affiliates so that all of George’s attention can remain focused on the Midwest bank.”
“This succession plan focuses resources on the Midwest bank, provides an optimal balance of continuity and change, and positions us for exciting new possibilities after we weather the current storm,” Mr. Grzywinski added.
The plan is subject to approval by bank regulators, who slapped ShoreBank with a “cease and desist” order last summer after the bank suffered heavy loan losses. The bank needs to raise tens of millions in new capital to survive after the recession hit its South Side and West Side borrowers hard.
In addition, the bank announced Todd Brown, the former Kraft Foods Inc. executive who’s been vice-chairman at ShoreBank for nearly seven years, is retiring at the end of the year.
It appears as though the ship may be sinking and people are running for their lives.
In a subsequent article by Steve Daniels with ChicagoBusiness.com dated January 18, 2010:
ShoreBank seeks financial rescue from state of Illinois
The state of Illinois is considering an unprecedented bailout of ShoreBank, the struggling South Side bank acclaimed for its commitment to lending in low-income neighborhoods.
Prodded by the likes of U.S. Sen. Richard Durbin and U.S. Rep. Jan Schakowsky, Illinois Finance Authority officials met earlier this month with ShoreBank executives to discuss raising tens of millions for the bank through an IFA bond offering.
In minutes from the January 9th’s IFA board meeting, Chairman William Brandt indicated saving ShoreBank was still a priority for him. He explained that ShoreBank deserved special consideration for IFA assistance due to its unique social mission, but acknowledged the situtation was still fragile.
Should Illinois Taxpayers be forced to bail out any bank with Illinois funds? Is this a case of Shorebank being “too big to fail”? Or perhaps “too politically connected” to fail? What about smaller, less politically connected banks? Should the Illinois Finance Authority(IFA) consider bailing them out also?
The above article presents but a few of the many individuals who are personally invested in the success of Shorebank. It will be interesting to watch this situation continue to unfold. With Illinois being virtually bankrupt, how will Illinois residents respond to a bank bailout if it is, in fact, approved by the IFA? We, at the Central Illinois 9/12 Project, will definitely be keeping a close eye on the outcome.