Steve Daniels of Crain's Chicago Business reports that Aurora, Illinois-based Old Second Bancorp Inc. will stop paying dividends to the Treasury Dept. under the TARP program. The arrangement highlights how non-Wall Street firms are still reliant on TARP and also the continued -- questionable-- generosity shown to even medium-sized banks. Old Second Bancorp was burned by real estate loans, and in January 2009, the Treasury Dept. propped up the bank with the purchase of $73 million in preferred shares. The bank continued to take a nose dive, losing $60.6 million in the first half of 2009.

The Springfield State-Journal Register runs a story in anticipation of the National Association of Realtors' monthly statistical report on home sales that not only says home sales will be sharply down in July but even pinpoints the decline to one specific federal policy.

Paul Merrion of Crain’s Chicago Business reports that at the recent Treasury/HUD housing finance conference, the Chicago delegation wanted to talk about renting. Ellen Seidman of Chicago’s ShoreBank (which may be taken over by the FDIC at any moment) and Michael Stegman of the MacArthur Foundation discussed how the government favors home ownership over renting. Seidman argued that quasi-government institutions Fannie Mae and Freddie Mac, both still in Treasury Dept. conservatorship, should start to support the rental market.

Adam Doster of Progress Illinois looks at government’s unsatisfactory response to the growing foreclosure crisis– foreclosures in Illinois were up 33 percent in July compared to the year before. Doster writes that while state and local government could do more, the real culprit is the federal government:

The saga of Chicago’s ShoreBank is drawing to a close – despite the support of major Wall Street firms and perhaps President Obama, the community lender will likely go into FDIC receivership. Steve Daniels of Crain’s Chicago Business reports that “there are two probable scenarios” for the bank:

Chicago-based ShoreBank may be a goner after it lost at its attempt to get $75 million of Treasury Dept. TARP money. James Sterngold and Robert Schmidt of Bloomberg News explain that the bank applied to a TARP bailout program for community banks that invest in poor areas. Indeed, the case for saving ShoreBank revolved around its investment in Chicago's South Side as well as

Paul Merrion of Crain's Chicago Business reports on hostility the business community has toward the Obama administration, particularly Obama senior adviser Valerie Jarrett (who has seemingly held every single prominent governmental and business position in Chicago). The piece contains expected accusations against the White House: the president, Jarrett, and federal agency leaders pushed

ShoreBank, a community lender on Chicago’s South Side, is in bigger trouble than first thought – and the Obama administration may now let the bank fail.  The Chicago Tribune’s Becky Yerak reports that ShoreBank must raise at least $190 million in order to qualify for a $75 million Treasury Dept. TARP loan. Banking regulators arrived at the $190 million number after an awful 2nd quarter for the lender. Previously, the Treasury Dept. estimated that ShoreBank needed to come up with

Much of the landmark Affordable Care Act won't kick in until 2014, but one big component starts this year: federal tax credits for small businesses that provide their employees health care.  Mike Colias of Crain's Chicago Business relays a report by the D.C-based Families USA that 159,900 companies in Illinois are eligible for a federal tax credit of up to 35 percent.

Steve Daniels of Crain's Chicago Business caught this at the close of business Friday: the federal rescue of Chicago's ShoreBank has been postponed for at least another three weeks. The distressed community lender made national headlines in May when Wall Street titans including Goldman Sachs and Bank of America pledged $150 million to prevent an FDIC takeover. The Treasury Dept. was then expected to chip in $75 million of TARP funds, and with the combined $225 billion Shore Bank would be back on its feet. But the Federal Reserve has advised Treasury that ShoreBank needs more than $225 million (it's not clear how much more) -- hence the delay in TARP money. There is some justice in big banks that received multi-billion TARP bailouts helping out smaller banks that weren't immediately rescued by the Treasury Dept.