* Broadway Bank has become Senate race talking point

* Six other banks fail, bringing year total to 57 (Adds Giannoulias comment, changes dateline from WASHINGTON)

CHICAGO, April 23 (Reuters) - Regulators on Friday seized a Chicago bank owned by the family of the Democratic nominee running for the U.S. Senate seat once held by President Barack Obama.

Broadway Bank was among seven Illinois banks whose failure was announced on Friday. U.S. regulators have seized 15 banks in the past two weeks, as the Federal Deposit Insurance Corp ratchets up efforts to clean up the banking industry. Regulators have closed 57 banks this year.

Amcore Bank AMFI.O was the largest to close on Friday, with $3.8 billion in assets and $3.4 billion in total deposits as of Dec. 31, 2009, the FDIC said. It will be purchased by Harris National Association, a part of Canada's BMO Financial Group.

Broadway Bank, a community bank with $1.2 billion in assets, had been limping along for months under the weight of bad commercial real estate loans.

The bank is owned by the family of Alexi Giannoulias, the first-term Illinois state treasurer who is in a tight race for Obama’s previous post to be decided in the November election.

The FDIC said MB Financial MBFI.O is assuming the deposits of Broadway Bank.

Obama backed Giannoulias, a banking scion, for treasurer, and the two have played basketball together. But White House aides tried unsuccessfully to recruit other prominent Illinois Democrats to run for the seat.

In comments late Friday, Giannoulias called the bank’s closing “an incredibly sad and heartbreaking day for me and my family,” adding when he left the bank in 2006 to become state treasurer “it was one of the best-performing in Illinois.”

He said he would only fight harder to win the Senate seat.

Republicans have condemned Giannoulias’ role in the bank’s soured real estate portfolio that included loans to such figures as convicted prostitution ring operator Michael “Jaws” Giorango. Loans were also made to convicted influence peddler Antoin “Tony” Rezko, who also was a fund-raiser for Obama.

It is these loans, says DePaul University political science professor Michael Mezey, that could hurt Giannoulias even more than the failure of the bank.

“They’ve (the Giannoulias campaign) been talking about it (the bank) and claiming it would fail. ... It’s not news at this point,” he said. “The thing that may be more damaging than the closing is the loans to people of questionable character.”

The bank’s failure gives further ammunition to Giannoulias’ Republican opponent, five-term congressman Mark Kirk.

“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,” Kirk campaign spokesperson Kirsten Kukowski said in an email statement.

Giannoulias has characterized Broadway Bank’s troubles as similar to those of other community banks hurt by the harshest recession in decades.

His links to the failed bank comes at a time when the Illinois Democratic party is already in disarray.

The Illinois legislature impeached and removed Democrat Rod Blagojevich during his second term as governor in January 2009, after he was charged with racketeering, fraud, and lying to investigators -- including an accusation he tried to sell Obama’s vacant U.S. Senate seat.

In addition to Broadway and Amcore, the FDIC said five other Illinois banks failed on Friday. They are: New Century Bank, Citizens Bank&Trust Co, Wheatland Bank, Peotone Bank and Trust Company and Lincoln Park Savings Bank.

MB Financial is assuming the deposits of New Century, while Republic Bank of Chicago is assuming Citizens Bank & Trust Co’s deposits. Wheatland Bank will reopen as part of Wheaton Bank and Trust, First Midwest Bank, also in Illinois, will assume the deposits of Peotone Bank and Trust Company and Lincoln Park Savings Bank will become part of Northbrook Bank and Trust Company.