Statement on Silicon Valley Bank’s Collapse
Media Contact
Danielle Bell
SENIOR PROGRAM MANAGER FOR MEDIA RELATIONS
media@greenlining.org danielle.bell@greenlining.orgIn light of Silicon Valley Bank’s collapse followed by news that Signature Bank failed due to similar circumstances, it’s crystal clear we need stronger regulations to protect consumers and communities.
How We Got Here: History Repeats
When the Dodd-Frank Act was enacted in 2010 in response to the 2008 financial crisis, its aim was to establish strong financial regulations that would prevent the risky bank behavior that led to the crisis. Banks then lobbied aggressively to water down restrictions put in place by Dodd-Frank. As a result, in 2018 the Trump administration lifted restrictions on smaller banks like SVB, paving the way for the events we’re witnessing unfold now.
For banks, less restrictions and weaker regulations means they can take the kind of risks that lead to massive profits for investors. But at what cost?
As the media focuses on the impact of this bank failure on investors and the tech industry, we have to ask: what about the communities that stood to gain from the bank’s Community Benefit Agreements they spent years negotiating? What about the small businesses and potential homeowners that relied on loans from these banks, or the bank employees that lost their jobs? What about the emerging startups and companies that banked with SVB and now stand on uncertain financial ground?
While the impacts of this may not be as widespread as what we saw in 2008, the consequences of SVB’s closure will undoubtedly be felt by many working-class families and individuals who deserve better from our financial system.
Looking Ahead: A Call for Accountability
We agree with President Biden that the leaders of these failed banks must be removed from their management roles. In the past, we’ve seen little accountability for bank mismanagement and greed. This time, we demand accountability from those responsible to signal to the market that both the people and systems that led to these bank failures must change.
Previously, Greenlining worked with community members to secure a $9.6 billion Community Benefits Agreement with SVB. It is critical that any buyer or institution that takes over SVB honors these commitments and ensures the communities of color and low-income communities that would have benefited from the agreement are prioritized.
While SVB may no longer be around to support its community members, we remain committed to creating opportunities for resources to flow from financial institutions to the neighbors and communities who need it most. And most importantly, we will continue to advocate for the communities of color and low-income communities that are hardest hit by economic instability.
