ShoreBank, the Chicago-based community bank with ties to the Obama Administration, is heading for extinction.

FOX Business Network has learned that banking regulators have informed officials at ShoreBank that the company is heading for the Federal Deposit Insurance Corp.’s “resolution process,” whereby the FDIC takes over the bank and then separates out the bad assets -- in this case soured loans -- and attempts to sell off the good parts of the bank.

A ShoreBank spokesman had no comment on the matter, and an FDIC spokesman would neither confirm nor deny that it has alerted ShoreBank of its likely imminent takeover and demise. But people close to the bank, namely top executives at a consortium of Wall Street firms who have recently contributed tens of millions of dollars in capital to bail out the institution, say they have been informed that barring them giving tens of millions more, or a massive contribution of capital from the federal government, ShoreBank will soon fail, FOX Business has learned.

And according to people close to the matter, both scenarios are unlikely to occur. First, executives at the Wall Street firms believe that ShoreBank’s finances are in such disarray that they won’t receive a return on their first investment much less any additional money they contribute, which makes adding more money from them nearly impossible. The Wall Street firms -- Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), Bank of America (NYSE:BAC), Citigroup (NYSE:C) and JPMorgan (NYSE:JPM) -- and General Electric (NYSE:GE) agreed to pitch in a total of $150 million to recapitalize the institution, which in addition to $75 million infusion of cash from the federal government was thought to be enough to save ShoreBank.

But it wasn’t. As FOX Business first reported, analysts believed the bank needed as much as $400 million survive, and a recent study by the Federal Reserve confirmed that the  $225 million in additional capital fell far short of what was necessary to provide a long-term fix to ShoreBank’s problems.

Then there’s the issue of the federal government making a larger infusion of capital. People close to the bank say that’s unlikely because of the controversy surrounding the initial bailout effort. Scores of banks have been allowed to fail since the 2008 financial collapse, but ShoreBank, which has been singled out for its work in financing “green jobs” and lending to the poor by President Obama, and has ties to one of his chief economic advisers Valerie Jarrett, received extraordinary levels of support by the federal government to survive; FDIC chief Sheila Bair, one of the nation’s top banking regulators, called top officials at the big banks to provide a capital infusion to keep ShoreBank alive. 

That, in turn, led Goldman Sachs CEO  Lloyd Blankfein to take a direct role in the bailout effort by calling CEOs of other banks to raise money. At the time, Goldman was facing civil charges from the Securities and Exchange Commission, which it has since settled by paying a $500 million fine.

Meanwhile, the controversy surrounding ShoreBank’s connections to key officials in the Obama administration continues to swirl. The president’s former “green czar”, Van Jones, who was ousted following the disclosure of statements he made about the 9-11 terrorist attacks, had ties to the bank. Jarrett, one of President Obama’s associates from Chicago, served on Chicago civic board with a director of ShoreBank. Through a spokeswoman, Jarrett says she played no role in prodding the big banks to contribute money to the ailing company even though Wall Street executives say her name was used to convince them to provide the initial infusion of cash.

“There was no way this bank would have been kept alive this long without its political connection,” said an executive at a bank that made a contribution.

People close to the situation say the announcement of ShoreBank’s demise could be made anytime in the coming weeks.