This is a rush transcript from "Hannity," August 4, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: All right, we've certainly learned about the ugly side of Chicago politics in the past year. The Rod Blagojevich and Roland Burris pay-to-play scandal seemed to represent the worst of the Chicago political machine.

But now it seems another questionable character is running for the Senate seat that President Obama once held. Our special investigation examines Obama's newest protege. Let's take a look.

(BEGIN VIDEOTAPE)

ALEXI GIANNOULIAS, CANDIDATE FOR ILLINOIS SENATE SEAT: Today, I am very proud to formally announce my candidacy for the United States Senate seat once held by my friend.

HANNITY (voice-over): It looks like the Chicago political machine is turning out another questionable character to run for the Senate in Illinois. His name is Alexi Giannoulias. A, quote, "friend of Obama's," he was once considered such a political liability that he was mentioned by Obama's opponents in conjunction with terrorist Bill Ayers, slumlord Tony Rezko, and controversial pastor Jeremiah Wright.

Video: Watch the special investigation

He was born to Greek immigrants and raised in Chicago. His parents started the Broadway Bank, a very successful chain of banks, in the Chicagoland area.

ABDON PALLASCH, REPORTER, CHICAGO SUN-TIMES: With the bank's success, he was able to live a pretty good life. And at a young age, he was the vice president of the bank. Got his master's of business administration from the University of Chicago about the same time as Barack Obama was teaching law at the University of Chicago, so they got to be friends, playing on the basketball court there. Giannoulias actually played professional basketball in Greece for a couple years.

HANNITY: The budding friendship with Giannoulias would soon work, like many of the other Chicago friendships, to the president's advantage.

RICK PEARSON, POLITICAL WRITER, CHICAGO TRIBUNE: Giannoulias' family owns a major bank in Chicago, and Alexi Giannoulias was very much an integral player in helping Barack Obama get seed money for his 2004 U.S. Senate race. In exchange for that, there was also the fact that Giannoulias also provided an entre to the Chicago Greek community. Some of the people who have money in that community. And that was a big factor in helping Obama win that 2004 U.S. Senate race.

PRESIDENT BARACK OBAMA: Thank you.

HANNITY: As Obama's Star began to rise, so did the young banking heir's. He was named vice president and senior loan officer of his parents' Broadway Bank. And at just 30 years old, with the backing of his good friend Barack Obama, he ran for state treasurer, a position that lawmakers in the downstate capitol of Springfield had already slated to be filled.

PALLASCH: Giannoulias walked into the picture with the backing of Barack Obama. And that rankled some of the state party leaders, who wanted a regional balance. They weren't looking for a Democratic primary, but Alexia Giannoulias got in, with a commercial from Barack Obama endorsing him, and Barack Obama's endorsement was crucial to him winning that primary over Paul Mangieri.

OBAMA: Alexi Giannoulias. He's one of the most outstanding young men that I could ever hope to meet. He's somebody who cares deeply about people. He got that from his family. They really exemplify and embody the American dream.

PEARSON: I think's fair to say that Giannoulias, by using Obama, featuring him in his ads, that was a very big factor in him becoming the youngest state treasurer in the country at that point.

HANNITY: But during the campaign, some troubling decisions he made as chief loan officer of the Broadway Bank came back to haunt him.

PALLASCH: The bank had given out some loans with people with ties to organized crime. They also gave out loans to Tony Rezko, who was later indicted for influence-peddling in the Blagojevich administration.

HANNITY: Giannoulias reportedly loaned $12 million to Michael "The Jaws" Giorango, who was convicted twice of bookmaking and promoting prostitution. And he also loaned $450,000 to Tony Rezko to help fund a 24-story condominium project that subsequently was never built.

But despite the serious allegations, Giannoulias won the election and became state treasurer. And to nobody's surprise, he was one of the first people to give money to Barack Obama's presidential campaign.

During his first term as state treasurer, he has made some controversial decisions that have many people in Illinois wondering where their money went.

PEARSON: A number of states have prepaid college tuition funds. Illinois is called "Right Start." One of the things that Giannoulias did when he got into office was change the management of that fund and also try to streamline it.

But at the same time, late in his first term here as treasurer, it was discovered that one of the 529 funds managed by Oppenheimer was heavily invested in mortgage-backed securities at the time when the housing market was collapsing. That fund alone lost an estimated $85 million.

HANNITY: But he said he had no idea that the taxpayers' money had been put in such a risky fund, although many people point out that he was the one who streamlined the whole project in the first place.

PEARSON: In the midst of this talk about the lost $85 million, it was disclosed that Giannoulias had spent roughly $26,000 of the management fees to buy an SUV for the — for the Illinois state treasurer's office. And he had no real records as to who was using that SUV or where it went or, really why it was needed.

HANNITY: So far, he's been accused of corruption. He has made more than questionable relationships with mobsters and is the least experienced since his basketball buddy ran for the Senate years ago. But he's still relying on his relationship, yes, with the king of Chicago politics to pull him through.

PEARSON: Whenever you listen to Alexi Giannoulias speak, it's always in a mandatory five references about Barack Obama and the role that Obama has played in his life.

HANNITY: When asked if the president endorses him the primary, Giannoulias had this to say.

GIANNOULIAS: I think the — the president and I will be just fine. We're excited about this.

HANNITY: But the young playboy and bank heir may have gotten more than he bargained for. He is running against an experienced Republican named Mark Kirk and has a state population that wants to distance themselves from the corruption and the scandals of Blago and Burris that have plagued the government for the last year.

I think you're going to see the spotlight intensified greatly on Giannoulias. You do have kind of the Obama factor in play here. You have the fact that he's 33 years old and really playing that new generational type of message out there.

But you know, running for Illinois state treasurer is one thing. Running to join the world's most exclusive club of 100 is another.

(END VIDEOTAPE)

And there you have it, folks: Chicago politics at its finest.

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