This morning in Chicago, the Union League Club hosted the first debate among the Democratic candidates for U.S. Senate in Illinois. And there were some fireworks.

The first 25 minutes went by rather uneventfully, until Alexi Giannoulias leveled the first attack against opponent David Hoffman, accusing him of "hypocrisy."  Specifically, Giannoulias noted that Hoffman has repeatedly criticized the "big Wall Street banks" while simultaneously holding stock in several financial institutions that have received federal bailout funds.  He went on to note that Hoffman has also put at least $500,000 of his personal funds into his Senate campaign. (The Giannoulias campaign also advanced this line of attack in a new web ad released shortly after the debate concluded.)

Hoffman responded by downplaying the amount of stock in question: "My holdings ... amount to less than one-ten-millionth of a percent of the ownership of those banks."  (UPDATE, 3:45 p.m.: In a statement released later in the day, Hoffman campaign manager Michael Powell added: "Like many Americans, David Hoffman owns stock, but none of the bank stocks were used to help fund his campaign.")

Hoffman went on to highlight Giannoulias' family bank as well as criticize his management as state treasurer of the Bright Start college savings program.  Over the remainder of the debate, the candidates proceeded to go back-and-forth many times more, as the video below documents:

So what about Hoffman's assertion that Bright Start is not, as Giannoulias said, one of the "top three" college savings programs in the country?  In a press release put out after the debate today, the Hoffman campaign further attempted to rebut Giannoulias by noting that Bright Start "has not appeared on [Morningstar's] best performing list since the end of 2007, after which the fund lost 38% of its value."

We've written extensively about Bright Start and there a couple problems with Hoffman's line of attack. 

First, while the savings plan may have fallen out of Morningstar's top five in recent years, it has nonetheless been ranked high by several other national sources.  In their own press release, the Giannoulias campaign points to two examples from this year:

- In March 2009, Consumer Reports ranked Bright Start as one of the best 529 plans in the nation stating, "After studying state 529 college savings programs to see how well they performed during last year's stock-market plunge, we found five that are worthy of an A."

- In April 2009, Money Magazine ranked Bright Start in the top three low-risk 529 plans.

Also, it's not fair to suggest -- as the Hoffman campaign does in their release -- that the entire Bright Start program "lost 38% of its value" last year.  In fact, only the accounts that were fully or partially invested in Oppenheimer's "Core Bond Fund" saw those steep losses.  To be more specific, about $200,000 of the total $2 billion in Bright Start assets were exposed to Core Bond.  When the fund tanked, this resulted in $85 million in related losses.  But the remaining $1.8 billion did not take such a devastating hit. This is part of the reason why Morningstar continues to recommend the plan to Illinois parents:

For newcomers, this plan still holds appeal. The plan's fees range from a reasonable 0.48% to 0.68% for its "Blended Portfolio" (a mixture of active and passive strategies) to a rock-bottom 0.22% for the plan's unchanged "Index Portfolios," which are still the cheapest nationally available Vanguard-centric options in existence. Adding to the plan's appeal, in-state residents can deduct up to $10,000 in contributions from their state income tax (up to $20,000 if filing jointly). In all, we still think this plan offers investors plenty of reasons to invest here.

It should be noted that the interactions between Giannoulias and Hoffman during the debate weren't all so tense.  At one point, while discussing relations between Israel and Palestine, Giannoulias expressed excitement at "finally" being able to agree with Hoffman on an issue (which elicited a chuckle from his opponent).  Watch it:

Some other items of interest from the debate:

- Hoffman expressed disappointment that the House defeated an amendment to allow judicial mortgage modifications last week (which we wrote about here).  "The banks get protection when a consumer goes into bankruptcy," he said. "But consumers do not, with an inability to get their mortgage written down like all their other debts."

- Jacob Meister was the only candidate to voice support for reenacting the Depression-era Glass-Steagall Act, which erected a wall between commercial and investment banks (before being repealed by Congress in 1999). "We need to create that divide between banks and securities," he told the audience.  It just so happens that U.S. Sens. Maria Cantwell (D-WA) and John McCain (R-AZ) unveiled such a plan this week.

We'll try to post all four candidates' opening statements soon.

Full Disclosure: The SEIU Illinois State Council, which sponsors this website, has endorsed Alexi Giannoulias in the Democratic primary for U.S. Senate.