Silicon Valley Bank Pledged to Invest $11 Billion in Underserved Communities. Will Its New Owners Honor That?

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People stand in line outside a building with the "svb" — Silicon Valley Bank — logo.
Customers wait for service outside Silicon Valley Bank in Menlo Park on March 13, 2023, just days after the bank failed and its assets were seized by the FDIC.  (John Brecher for The Washington Post via Getty Images)

As part of a merger two years ago, Silicon Valley Bank entered into a community benefits agreement (PDF), committing to spending more than $11 billion over five years on things like affordable housing and small-business loans in the Bay Area and Los Angeles.

But nearly two weeks after SVB’s collapse, the Federal Deposit Insurance Corporation has struggled to find a buyer for the bank, and has now broken it up into two separate units, setting Friday as the second bidding deadline.

Given all that, it remains unclear whether federal regulators will require prospective buyers to honor the community benefits agreement.

“It’s a real economic driver, and a real concern when you lose that,” said Paulina Gonzalez-Brito, CEO of the California Reinvestment Coalition (CRC), which negotiated the agreement.

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“We’ve seen the regulators step in to provide real support for depositors, and we agree that was an important step … and so we’re glad that the depositors are going to be protected,” Gonzalez-Brito added. But, she said, “we hope that there’s going to be just as much attention from the regulators to protect” the agreement.

Gonzalez-Brito said she’s heard that private equity and hedge fund managers are interested in buying the bank, which she said may not bode well for the future of the agreement.

“If a purchaser is not committed to community reinvestment, I think it becomes really difficult to have them assume responsibility for this commitment, and to successfully implement it,” she said.

The CRC, which advocates for lower-income communities and communities of color, consists of 300 members across the state, including affordable housing developers, community development financial institutions and nonprofit legal service agencies.

A petition started by the group is urging the FDIC to require any buyers to uphold SVB’s affordable housing commitments.

“I think it’s a fair assessment to say that the bank was doing a good job, and maybe a better job than other banks, in providing support to affordable housing, to communities of color, to low-income communities, both small-business support as well as housing support,” Gonzalez-Brito said.

Ari Beliak, who heads Merritt Community Capital, a nonprofit affordable-housing funder that worked closely with SVB, said many of the bank’s staff who work in affordable housing financing are still there — at what’s known as a “bridge bank” — and say for now, at least, “they’ve been told that they should act as business as usual.”

“Silicon Valley Bank has been an investor with Merritt for 15 years. They really increased dramatically the amount of their investment after they signed the community benefits agreement,” he said.

The big national banks or investors expected to take over SVB’s assets “look at the macro and not the micro, and the micro is where the people are,” Beliak added.

“I don’t know who’s going to step up when Silicon Valley Bank walks away,” he said. “Without them, we don’t know who’s going to step into that void, if anyone’s going to step in.”