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Republican Rep. Mark Kirk is already accusing Giannoulias of lying to the voters about the loans, and his campaign is guaranteed to be pounding away at the bank's problems in millions of dollars worth of television ads.
But the 34-year-old Giannoulias is still electable if he meets the bank embarrassment head on and strikes back at the Republican congressman as more conservative than this Democratic-trending state, Democratic insiders say.
Democrats brush aside any talk of getting Giannoulias to bow out of the race.
"Alexi Giannoulias is running a strong campaign on the issues that matter to the people of Illinois
- like job creation and the economy," says Deirdre Murphy, national press secretary of the Democratic Senatorial Campaign Committee.
Giannoulias was not granting interviews Friday as the Chicago Tribune ran a front page story with the headline: "$20 MILLION IN BANK LOANS TO FELONS." The story detailed how Broadway Bank, a Giannoulias family-owned institution in Chicago, had lent large sums to convicted felons Michael "Jaws" Giorango and Demitri Stavropoulos.
The fact that Broadway had loaned the men millions - Stavropoulos was convicted of running a multistate bookmaking ring and Giorango of promoting a nationwide prostitution ring
- was a campaign issue when Giannoulias ran for state treasurer in 2006. But the Tribune reported it reviewed court files and other documents that showed millions more
- a total of more than $27 million worth of mortgages to Giorango, his land trusts and companies since 1999, $20 million of which was loaned when Giannoulias was a senior loan officer.
Giannoulias spokeswoman Kathleen Strand said he had "no role with these two individuals nor did he sit on the loan committee with these loans." She sought to portray the story as old news, saying Giannoulias has been answering questions about the loans for years.
The bank is fighting to keep its doors open. It is holding some $242 million in bad loans, and in January, entered into a consent decree with the federal government and has 90 days to raise about $85 million. But Giannoulias recently told The Associated Press that he believes it would be "very tough" for it to survive.
Democratic insiders in Washington, who spoke on condition of anonymity so they could freely discuss their views, say they expect the bank to fail eventually but think that will be greeted as "old news" by voters.
The White House's political team, still smarting after the stunning loss of the late Sen. Edward M. Kennedy's Massachusetts seat to Republican Scott Brown, has refocused its attention beyond the Beltway. Though not responsible for all Democratic campaigns, White House officials are aware any Democratic loss will be painted as a referendum on Obama.
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 The Democratic insiders said they learned lessons from Brown's election and have made sure Giannoulias' team would be unlikely to require a wave of Washington consultants to buttress a flailing campaign, as happened in Massachusetts. In that race, vans shuttled staffers from the Democratic committees around Washington northward for a final attempt to help Brown's Democratic opponent, Martha Coakley.
While the White House isn't keen on saying that Giannoulias stands to recoup only a few million dollars from the wreckage of the bank, internal polls and focus groups show he can win with that approach, according to these insiders.
They say Obama, who remains popular in his home state, will campaign for Giannoulias and top political adviser David Axelrod, a veteran of Chicago politics, is in constant touch with developments in Illinois.
At the Statehouse in Springfield, the hallway whispers are that top Democratic leaders would have preferred Illinois Attorney General Lisa Madigan, whose father, House Speaker Michael Madigan, is party chairman. But she didn't run and some say she probably would prefer to go for governor if she had her choice.
Meanwhile, Kirk capitalized on the fresh attention to his opponent's woes, saying in a statement Friday that Giannoulias has falsely claimed that he didn't know about the criminal backgrounds of Giorango and Stavropoulos.
"Alexi Giannoulias misled voters to get elected state treasurer and continued to mislead voters in an effort to win election as a United States senator," he said.
Chicago political consultant Don Rose said that if the election were now he thinks Kirk would win but sees a good opportunity for Giannoulias make up for lost ground, especially if the economy improves.
"They have to make Kirk unpalatable politically and level the playing field," Rose said. "Of course the best thing would be if they could get him (Giannoulias) to resign and replace him." But that isn't going to happen, Democrats say.
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Elliott reported from Washington.
[Associated
Press; By MIKE ROBINSON and PHILIP ELLIOTT]
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