The family of Democratic U.S. Senate nominee Alexi Giannoulias stands to collect more than $10 million in federal tax refunds even if its Broadway Bank fails, which Mr. Giannoulias said this week is likely.
A $75-million loss at the struggling lender last year generated tax benefits potentially worth between $12 million and $15 million to Mr. Giannoulias, his two brothers and his mother. As the sole owners of a subchapter S corporation that controls $1.2-billion-asset Broadway, they pay the taxes on the bank’s income and reap tax deductions on its losses.
The possibility of family members pocketing millions in tax refunds as Broadway slides toward insolvency and federal receivership is likely to fuel more controversy for Mr. Giannoulias, who is already under fire for his role in the bank’s downfall.
(Via Hot Air) Of course, not being in a rich banking family linked to Chicago’s culture of political corruption… oddly enough, that’s precisely the kind of work that I can’t get. And then there’s this little gem:
Asked whether he would advise his family to put the tax refunds back into the bank to help recapitalize it, Mr. Giannoulias said, “We’ll do everything we can to keep the bank going. . . .You’ll have to ask management of the bank what the best course of action is.”
Translation: “No.” Mind you, if they took this money and added it to the 70+ million in dividends that the Giannoulias family pulled in from the failing bank from 2006 to 2008, the bank would probably be able to avoid closing. But that would hurt them; so better to let the bank fail, let the FDIC take it over, and let the taxpayers take the blow. Much better, all around.
After all, the Giannoulias family got their refund.
PS: Mark Kirk for Senate. He doesn’t get paid three times for failure.
Crossposted to Moe Lane.