SAN FRANCISCO – California Reinvestment Coalition CEO Paulina Gonzalez-Brito offered the following statement Friday after it was announced that federal regulators had assumed control of Silicon Valley Bank (SVB), after depositors and many of the bank’s backers pulled out when its stock began to tank earlier this week.
“The past 24 hours have reshaped the banking landscape. In the wake of what is now the biggest bank failure we’ve witnessed since the Great Recession, we cannot help but think of the communities that will be affected by another bank’s disappearance.
“The discourse around SVB’s failure has centered on the bank’s shareholders and the tech startups that received financial services from the bank. Who is left out of the conversation? California communities. Although shareholders are of primary concern to banks, communities can not be last.
“When we secured a community benefits agreement with SVB in 2021 as part of its acquisition of Boston Private Bank, it signaled a win for small entrepreneurs, and low- and moderate-income borrowers of color, who have been historically denied access to capital. We fear for what will happen to these communities who had been promised they wouldn’t be left behind and would be given the opportunity to build wealth and expand their access to capital.
“Whether it is through mergers or collapse – bank closures destabilize communities. So, when we talk about what’s next for the bank, and the banking sector, we must also talk about what’s next for communities. That means closer regulatory scrutiny of bank mergers as well as strong bank commitments to communities, customers and workers.”
SVB was the nation’s 16th largest bank. The California Department of Financial Protection and Innovation took possession of SVB Friday, naming the Federal Deposit Insurance Corporation as the receiver to hold the insured deposits from SVB. The bank agreed to an $11 billion, five-year CBA that began in January 2022. The agreement included $9 billion specifically for California, $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 (LMI) borrowers, and$60 million in charitable contributions.