Here’s something you don’t see every day. A small bank in Chicago loaned nearly one-fourth of its equity capital to the same person, even though that person was a bad loan risk to begin with. That person just happened to be former Donald Trump campaign chairman Paul Manafort. And the person running the bank just happened to be another Donald Trump campaign adviser.
Not shockingly, New York State and New York City prosecutors are now going after that bank and Manafort to figure out what was really going on, with subpoenas flying. The bank in question is Federal Savings Bank of Chicago, which is run by Steve Calk, who was an economic adviser to the Trump campaign, according to the Wall Street Journal (link). Calk insists he didn’t do anything wrong or unusual. But the numbers suggest something more than a little irregular.
Manafort had property that was about to be foreclosed on, so he was desperate to borrow the money and keep it afloat. But banks don’t generally loan money to people who are on the verge of bankruptcy, unless there’s a good reason to. And there doesn’t appear to be any reason why a tiny bank would have thought it was a good idea to float $16 million to Manafort when its entire equity capital was just $67 million. It would have been odd for a major bank to loan that much money to a bad risk like Manafort.
It’s even weirder that a small bank decided to basically bet its own existence on Paul Manafort paying it back. But maybe it’s all not so weird after all, because the WSJ says Steve Calk was trying to convince Donald Trump to appoint him Secretary of the Army at the time he had his bank bail out Trump’s broke friend Paul Manafort. Go figure.
Bill Palmer is the publisher of the political news outlet Palmer Report