CRC on Friday convened a virtual town hall meeting to address some of the most pressing questions and discuss how the current economic landscape affects its members’ programs and advocacy projects in the wake of the collapses of Silicon Valley Bank (SVB) and Signature Bank.

Last weekend, federal regulators assumed control of SVB and then Signature Bank a few days later after both banks failed due to mismanagement, trepidatious depositors and many of the bank’s backers pulling out when its stock began to tank earlier last week. The seizure and closure of both banks sparked a “contagion” scare amongst industry professionals which drew controversy between community groups and bankers, ultimately leading to a federal investigation and congressional disputes behind SVB’s failure and how regulatory rollbacks on the Dodd-Frank Act contributed to the fervor.

Dozens of CRC members and allies spanning housing and economic justice nonprofits as well as community financial development institutions attended the event. Kevin Stein, CRC Chief of Legal and Strategy, kickstarted the meeting with a summary of why both banks collapsed and what those collapses likely mean for low-to-moderate-income communities and existing community benefits agreements (CBA).

“We had some mechanisms in place to provide greater oversight of financial institutions. But in 2018, under the Trump Administration, there was an effort by some of the mid-sized and larger banks to exempt themselves from this greater scrutiny, including SVB who lobbied for these changes,” Stein said. 

Concerns stemmed from areas outside of the chaos associated with the closures including the future or CBAs, deposit safety, grant renewals, affordable housing development and a new loan environment that has put members’ recent activity essentially “on ice.” 

“We need to be aggressive about protecting the assets of underserved communities,” Executive Director of the Fair Housing Council of San Fernando Valley and former CRC board chair Sharon Kinlaw said. “And the organizations that have invested into the soil of these neighborhoods and communities.” 

In light of the closures, this week CRC called on regulators to halt all bank merger activity until bank merger rules are updated.

“Alarmingly, little concern is being expressed about the impact of bank failures on low-income communities and communities of color with which banks make commitments to serve by reinvesting back into communities and entering into community benefits agreements,” CRC said in a statement. “Such commitments are critical to keeping communities at the forefront of bank mergers, which provide short-term gains for banks, but are generally bad for consumers as they are provided fewer banking options and greeted with higher fees while experiencing branch closures, job loss and reduced reinvestment.”

Additionally, CRC CEO Paulina Gonzalez-Brito appeared on KQED News this week echoing member concerns while stressing the importance of the inevitable sale of SVB to be intact rather than in pieces to protect the multi-billion dollar CBA, which was solidified in 2021 and in motion until its failure. 

“This town hall presented an opportunity for our members to share the concerns and find solutions to questions being asked by their clients and to highlight what they’re hearing on the ground and in their communities,” Gonzalez-Brito said after the meeting. “It’s especially important right now for communities to be listened to and to put them at the forefront of this discussion of our economy.”