Washington (CNN) – The bank owned by the family of Illinois Senate candidate Alexi Giannoulias was closed by regulators on Friday, a development likely to complicate Democratic efforts to keep President Obama's old Senate seat from falling to Republicans in November.
Broadway Bank's failure was the result of an "unraveling of the real estate market," Giannoulias said. Economic conditions have "taken a gigantic toll on homeowners, businesses, community banks, and families throughout our country," he added.
Giannoulias, a former employee of the bank, said Broadway Bank "was one of the best performing in Illinois" when he left to run for state treasurer in 2005.
Giannoulias will face Republican Rep. Mark Kirk in November.
Kirk, who topped Giannoulias by more than $1 million in first quarter fundraising, has sought in recent weeks to make the bank a central campaign issue.
"Rather than run on his record, Congressman Mark Kirk's entire campaign to date has revolved around hoping and praying that this family business would fail," Giannoulias said.
Kirk spokesperson Kirsten Kukowski said in a statement Friday that it is a "sad day" for Broadway Bank employees.
"While years of risky lending schemes, hot money investments and loans to organized crime led to today's failure, it's a sad day for Broadway Bank employees who may lose their jobs due to Mr. Giannoulias' reckless business practices," Kukowski said.
The Federal Deposit Insurance Corporation put the bank into receivership and struck a deal with MB Financial Bank of Chicago to take it over. Broadway Bank's four branches will reopen as branches of MB Financial, and depositors of Broadway Bank will automatically become depositors of MB Financial Bank.
Broadway Bank's failure will cost the national deposit insurance fund an estimated $394.3 million. So far this year, 57 banks have failed nationwide – 10 in Illinois.
Even without the Bank failure, this "empty suit" holds promise of being a marginal senator at best; Mark Kirk certainly has his shortcomings, but unless Alexi Giannoulias drops out and the Democratic Party replaces him with a solid candidate, this will not be a contest in November. It will be a landslide.