The Federal Deposit Insurance Corporation this week rejected pleas to enforce $11 billion in community investments – and protect affordable housing projects – that the failed Silicon Valley Bank had pledged in 2021.
In response to questions from San Jose Inside about the fate of SVB community investments, a spokesman for the FDIC said simply, “Those pledges ended with the failure of the bank.”
The March 27 purchase by First Citizens Bancshares of “all of the assets and liabilities” of Silicon Valley Bridge Bank – created by the FDIC in the wake of the collapse of the Santa Clara-based Silicon Valley Bank three weeks ago – did not include an agreement signed by SVB as part of its merger with Boston Private Bank.
The failures of SVB and New York’s Signature Bank this month triggered the worst banking crisis in the U.S. since 2008. The new revelations of the impact of the SVB failure on numerous development projects such as affordable housing construction, new small business loans and charitable organizations are likely to send aftershocks through communities in Silicon Valley and beyond.
The California Reinvestment Coalition on March 24 delivered a petition signed by more than 20,000 people urging the FDIC to “enforce Silicon Valley Bank’s existing $11 billion community benefits agreement should it be sold to new owners.”
The First Citizens deal only included deposits and loans, which represent the bank’s primary source of revenue. It did not include SVB's community reinvestment agreement or a nearly $90 billion securities portfolio.
The FDIC this week said it had retained Blackrock Inc. to sell the securities portfolios of SVB and Signature Bank.
The California Reinvestment Coalition said the now-defunct agreement “facilitated the construction of critically-needed affordable housing projects in the Bay Area, which are now in jeopardy of significant delays and loss of funding.”
“In the immediate aftermath of SVB’s failure, federal regulators missed an opportunity to show the American public that they work in their best interest, and not in the interests of banks,” said Paulina Gonzalez-Brito, CRC chief executive officer. She said in a March 24 statement that honoring the 2021 agreement “would be a signal to vulnerable communities that regulatory agencies care about equality.”
“We don’t understand why measures haven’t been taken to protect communities, particularly those communities made up of low- to moderate-income people and Black, Indigenous and people of color,” said Gonzalez-Brito. This is yet another example of how these communities are left behind while banks and the wealthiest groups receive bailouts.”
Kevin Stein, CRC chief of legal and strategy, added: “Taking emergency measures to protect all deposits provides an additional benefit to SVB and its successor, and this added benefit should come with additional responsibility and obligations to the public.”
California community groups expressed concerns over the potential loss of SVB investments at a March 17 town hall meeting. The CRC had called for regulators to halt all bank merger activity until current bank merger rules were updated to protect consumers and communities.
SVB had agreed as part of its merger with Boston Private Bank to a five-year, $11 billion investment plan, with $9 billion specifically for California, that included:
- $4 billion in small business loans of $1 million or less
- $4 billion in CRA community development loans and investments
- $1 billion in residential mortgages to low- and moderate-income borrowers;
- $60 million in charitable contributions
- $10 million to establish an affordable home mortgage program
The documents:
Purchase agreement, SVB by First Citizens
Community-Benefits-Plan Silicon Valley Bank 2021
Just an observation,
Looks like CRC grifters Paulina Gonzalez-Brito and Kevin Stein are not going to be able to profit as much off taxpayers and banking customers.
SVB should have been focused on customers and investors and not making promises of charity and non-performing loans that it could not keep. If the community projects are worthwhile investments then the anticipated returns from those loans will provide for repaying the loans.
The entire future outlook and feasibility of those “charitable” loans and mortgages has changed with long term record high Biden-flation and the Fed driven higher interest rates to combat Biden-flation.
The bail-out bank has no business that includes “additional responsibility and obligations to the public” and in my opinion, SVB investors should not have been given a complete bail-out above FDIC limits.
Paulina Gonzalez-Brito is one CEO that fails on knowing the difference between Equality and Equity.
” She said in a March 24 statement that honoring the 2021 agreement
‘would be a signal to vulnerable communities that regulatory agencies care about equality.’ .”
The U.S. was founded on Equality.
Equality means EQUAL treatment to ALL citizens, as called for in the U.S. Constitution’s 14th Amendment clause that deals with equal protection of laws.
Equity means treating Americans UNEQUALLY to ensure that outcomes are equalized, the old tried (and failed many times) Marxian standard.
In fact all these so-called “communities made up of low- to moderate-income people and Black, Indigenous and people of color,” received numerous bailouts over the past 2-3 years in the form of COVID cash, rent forgiveness, increased food stamps, free medical services & equipment and numerous other taxpayer funded government largess that is now driving the public’s current failing economic situation and poorer outlook for the financial future.
PEW research from a week ago shows:
81% say economic conditions are fair to poor.
46% expect economic conditions to get worse over the next year.
The cost of food, consumer goods and housing remain major concerns for the public.
94% of Americans are concerned about the price of food and consumer goods,
with 72% saying they are very concerned.
88% also express concern about housing prices with 61% saying they are very concerned.
BAFO……”The US was founded on equality…” LOL……wow……just wow….
“equality of outcome.” Talk about dystopian logic. “Hey you! the guy with only one hand…..come over here and watch all the hands being cutoff so that we can achieve equality of birth outcomes”
Equality means “treating Americans unequally….” hahaha….
I feel like I reading a lost chapter of Animal Farm……..”Everybody is equal, but some people are more equal than others.”
Just an Observation,
Not only this but you should read Business Insider report “Housing is so unaffordable that banks are losing money for each mortgage they finance for the first time ever” Thus there is a record Credit Shrinkage. Here is another report from reventure https://youtu.be/Uh8Jnbafrwc
And Scott Walters reports Here is an estimated 10M people going to leave properties seen here https://youtu.be/HE_so4jtYjY
And agents are quitting seen here https://youtu.be/QeAJpiLUks0
And also there are apartments going out of business in Houston a Apartment owner lost 3200 units due to foreclosure. https://www.wsj.com/articles/houston-apartment-owner-loses-3-200-units-to-foreclosure-as-multifamily-feels-the-heat-fb3d0e75
This is fun to watch.