Updated Dec. 5, 2012 – 5:45 p.m.
The irony couldn’t be starker for state Rep. LaShawn Ford.
While under investigation for bank fraud by federal authorities, Ford continued his work in the community by introducing a resolution to the General Assembly to help save a troubled West Side bank.
Ford was indicted on Nov. 29 by the feds on a 17-count indictment, but introduced the resolution on Tuesday Nov. 27 on behalf of Covenant Bank, located in North Lawndale on the West Side, to help improve its capitalization problem.
House Resolution 1305 calls on the Secretary of Financial and Professional Regulation to grant an extension to the bank, which was purchased in 2008 by west suburban pastor, Rev. Bill Winston of the Living Word Christian Center.
Covenant, the West Side’s only black-owned bank, has been working with the Professional Regulation agency and the Federal Deposit Insurance Corporation on its extension. The bank has until Dec. 2, 2012, to “correct the capital impairment,” Ford said at a press conference at the bank last Tuesday.
His resolution asks for a 180-day extension of Covenant Bank’s deadline, barring any critical undercapitalization levels. It also asks to consider similar extensions for other small community banks still trying to recover from the Great Recession.
In addition, Ford asks the community to call their legislators to sign onto the resolution.
“It’s important that we do everything we can to help Covenant Bank on the West Side,” he said. “We have had at least three banks to close on the West Side within the last two-years. They did not want to be in the community. Here, we have a bank that is fighting to stay in the community and wants to be here.
Founded in 1977 as Community Bank of Lawndale by members of the community, the bank was acquired by Winston with the help of 3,000 shareholders who are also his church members.
Belinda Whitfield, president and CEO of Covenant Bank, says the state department of banking has issued an order for Covenant to raise capital “in a very short timeframe” and that the extension is needed to accomplish that. The bank, however, has faced financial problems in the past.
Under its former owners and name, the bank in 2003 faced federal scrutiny by regulators concerning its management structure and level of capital, among other issues. In April of that year, the feds issued a cease-and-desist order against the bank and ordered it to streamline management and boost capital.
The bank looked poised to close before being sold in late 2003 to International Bank of Chicago, an Asian-owned entity, for $2.5 million. Winston paid a reported $3 million for the Lawndale bank in ’04.
Covenant currently has assets totaling around $61 million.