Some of the nation's largest banks have agreed to contribute enough money to save Chicago-based ShoreBank, the community lender with strong ties to the Obama administration, FOX Business has learned.
The banks have agreed to contribute $140 million to bail out the bank, while the federal government will donate tens of millions more, according to people close to the talks. In addition to major Wall Street firms like Goldman Sachs (GS), which agreed to contribute $20 million to the bailout effort, as well as Citigroup (C) and JPMorgan (JPM), General Electric's (GE) GE Capital will also contribute $20 million to the rescue effort. All the firms have either received massive government assistance during the financial crisis or, in the case of Goldman Sachs, are facing multiple regulatory investigations into their business practices.
The bailout has been controversial. Senior Obama adviser Valerie Jarrett served on a Chicago civic organization with a director of the bank, and President Obama himself has singled out the bank for praise in lending to low-income communities.
But the bank has made its share of bad bets, and some of the Wall Street firms that have given money have said they've received political pressure to contribute to the bailout of a business that under normal circumstances would have been left to fail.
It's still unclear how much the federal government will contribute to save the bank because it's unclear exactly how much is needed to save the institution, which without the bailout would have been taken over by the FDIC.
An announcement on the bailout is expected Tuesday morning.