By Dave Clarke

WASHINGTON (Reuters) - There is no evidence that
politics played a role in the government seizure of a Chicago
bank owned by the family of the Democratic nominee running for
the U.S. Senate seat once held by President Barack Obama, a
government watchdog said this week.

On April 23, bank regulators seized Broadway Bank, a
community bank with $1.2 billion in assets, and the Federal
Deposit Insurance Corp arranged for MB Financial Inc
to assume its deposits.

The move then became embroiled in this year's campaign
season because the bank was owned by the family of Alexi
Giannoulias, the first-term Illinois state treasurer and the
Democratic nominee in this year's U.S. Senate race.

In May, the ranking Republican member of the House
Oversight Committee, Darrell Issa, raised questions about
whether Giannoulias' candidacy led bank regulators to wait
longer than it should have to seize the bank in order to
potentially shield him from political embarrassment.

Republicans have condemned Giannoulias' role in the bank's
shoddy real estate portfolio that included loans to such
figures as convicted prostitution ring operator Michael "Jaws"
Giorango. Loans were also made to convicted influence peddler
Antoin "Tony" Rezko, who also was a fund-raiser for Obama.

A report released by the FDIC's inspector general, an
independent office in the agency, said it found no evidence of
any political mischief.

"We did not see any evidence that the examination or
enforcement action were delayed for political reasons or that
the timeliness of the examination or enforcement action
impacted Broadway's closing date," the office said in its
report.

"Instead, we concluded that delays in processing the
examination and issuing the enforcement action resulted from
the complexity and condition of Broadway, the increased
regulatory workload from the rise in bank failures and the need
for coordination between the FDIC and" state bank regulators.

To make this determination the inspector general's office
said it conducted interviews with top FDIC officials and
reviewed emails, calendars and phone records to look for
evidence of pressure being put on the agency by the Obama
administration or congressional officials.

Giannoulias worked for the bank until leaving in 2006 to
become state treasurer and Republicans have sought to make an
issue out of both Broadway's failure as well as whom the bank
did business with.

Giannoulias' opponent -- five-term Republican congressman
Mark Kirk -- has attacked him for extending loans to convicted
mobsters.

The two candidates are in a dead heat in the race,
according to polls.
(Reporting by Dave Clarke; editing by Andre Grenon)