The tainted banker

As the latest manifestation of Democratic woe, most commentators are citing Beau Biden's Monday decision to forego a bid for the Senate in 2010. True that. When the vice president's own son confesses reluctance to seek the seat long held by dad, in a deep-blue state such as Delaware, then, yep, that's surely a sign of trouble for the majority party.

But I prefer to look at Illinois, where President Obama's old seat is up for grabs in November. The Democratic Senate primary election will be conducted for one week from today, and the odds are very strong that the winner - and, therefore, the Democratic candidate this fall - will be a guy with more heaping baggage than ex-governor/celebrity/clown Rod Blagojevich.

Let's be more specific: likely nominee Alex Giannoulias, who, as of Sunday, held a 15-point lead over two rivals in the polls, would severely undercut Obama's newfound populist rhetoric about the mendacity of the banks and the financiers. Why? Because Giannoulias is a banker long dogged by evidence of mendacity. Because he is an insider with a cloud over his head - at a time when Obama wants to fight for the average citizen, with the posture of an outsider.

Giannoulias and Obama have known each other for years (they met while playing basketball), but Obama has declined to tender an endorsement; indeed, last summer, Obama's people tried in vain to recruit for this race their preferred candidate, Illinois attorney general Lisa Madigan. They rightly sensed that Giannoulias could be a big problem. Here's why:

Giannoulias, during his tenure as vice president and senior loan officer of Broadway Bank, a Chicago institution founded by his father, oversaw loans that can be described as, shall we say, questionable. The bank loaned more than $11 million to a gentleman named Michael Giorango, a convicted bookmaker and prostitution ring promoter. The bank also issued loans to someone whose name might ring a bell: Tony Rezko, the corrupt political insider who (among many other things) helped Obama swing a sweet deal on his Chicago house and adjoining land. Rezko reportedly racked up $450,000 in Vegas gambling debts by writing bad checks on his Broadway Bank account. He has since been convicted of crimes in connection with the scandal that engulfed his close associate, the aforementioned Gov. Blagojevich.

Giannoulias then entered politics, running successfully in 2006 for the job of state treasurer. (He still has the job.) Apparently clueless about appearances, the candidate accepted a four-figure donation from a Florida casino fleet owner...whose uncle had been gunned down in an execution-style slaying. Giannoulias returned the donation only after the press hounded him about it. The casino fleet owner had financial ties to Broadway Bank.

These days, meanwhile, there's a complicated controversy concerning state treasurer Giannoulias' oversight of a college savings program that lost $150 million of parents' money. Giannoulias recently salvaged a deal with the firm that lost the money (OppenheimerFunds Inc.), thereby allowing the victimized families to get their money back. Correction: some of their money back, namely, 50 cents on the dollar. Giannoulias has defended his oversight in TV ads during the current primary campaign, but let's all just stipulate that the episode looks bad.

Some Democrats insist that they can hold the Senate seat in November, citing the fact that likely Republican nominee (and current congressman) Mark Kirk is an insider whose party rarely wins statewide races in blue Illinois. But I sniff a faint whiff of the Massachusetts dynamic. If Giannoulias as expected wins the primary next Tuesday, voters angered by hard times might come to perceive him as an apt symbol of the tainted insider - and thus be tempted to strike a blow at the state's Democratic establishment, if only in the service of checks and balances.

Obama strategist David Axelrod lamented recently that with Giannaoulias the paarty nominee, "the Blago saga will hang heavy over our politics." And, actually, it's worse than that. At a time when Obama wants to be seen as a populist crusader against the banks, what's the upside of having a tainted banker on the ticket back home?

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Earlier today, I sat for a live online chat. It ran for an hour. It's accessible here.