1986 | Probe exposed FHA loan defaults by developers

In 1986, Sun-Times investigative reporter Chuck Neubauer broke the story that U.S. Rep. Dan Rostenkowski had made as much as $100,000 on a $200 investment arranged by a developer buddy, Dan Shannon.

That would be the same Dan Shannon who got a tax break, pushed by the congressman, to build the Presidential Towers apartment complex downtown in 1983.

Neubauer later teamed with another reporter, Mark Brown, to expose the insiders who made a buck off Presidential Towers, even as taxpayers took a bath when the developers defaulted on their government-backed Federal Housing Administration loan. Profiting in the deal were businesses run by former 10th Ward Ald. Victor Vrdolyak, Illinois House Speaker Michael Madigan and the insurance company once run by Cook County Board President George Dunne and now-convicted embezzler Michael Segal.

That exercise in clout was just one example of the mess at the FHA, an agency that's supposed to guarantee loans or lend money to developers, who then are supposed to build something that benefits taxpayers. In a 1990 investigative series titled "FHA Follies," Neubauer and Brown broke the story that several downtown apartment buildings catering to young professionals -- River City and Burnham Park Plaza among them -- had defaulted on more than $200 million in FHA loans.

"The city of big shoulders, it turns out, has been pumping up its brawny skyline on the backs of federal taxpayers, who get stuck with the tab when developers of FHA-insured apartments stop paying their mortgages," they wrote.