Who will fill the vital role Silicon Valley Bank played in affordable housing?

The failed lender was a big success when it came to Massachusetts community reinvestment

BY NOW, the world has an opinion on what went wrong at Silicon Valley Bank. Banking and regulatory experts have, of course, weighed in. Venture capitalists quickly called for government to step in and insure all deposits. Even Twitter accounts that gained a following by reporting on pandemic or insurrection news, suddenly opined on a completely different disruption.

For now, we will leave that post-mortem to others as we elevate the “other” side of Silicon Valley Bank and the role it played in greater Boston’s low- and moderate-income communities.

In 1995, Boston Private Bank & Trust had a problem. Bank regulators were asking some hard questions about how the bank was meeting the requirements of the Community Reinvestment Act (CRA). The answers left them wanting more from the bank.

Boston Private’s CEO at the time decided they could do better. He hired a talented team led by experienced community development professionals and created a specialized CRA unit within the bank. Steadily, those team members became dependable partners for the region’s community development infrastructure.

Boston Private/SVB is one of the many banks that have made meaningful CRA-eligible investments in community development, affordable housing, and safe, affordable mortgages, and they funded good people to do good work. They stepped way up into this work with real commitment, in a way that more banks and corporations should. They had real impact, disproportionate to the bank’s asset size.

Boston Private hired some of the area’s best mortgage loan officers and gave them the best products to work with — Mass. Housing Partnership’s ONE Mortgage and MassHousing’s various mortgage options. Working for an institution with close to zero name recognition in Boston’s neighborhoods, they initially had a tall order.

This team taught first-time homebuyer class in the most underserved communities. They were visible at first-time homebuyer fairs where they introduced themselves to homebuyers and real estate agents as an institution that could be relied upon to get from offer to closing.

In 2004, a woman only five years removed from Jamaica sat in a classroom in Dorchester and talked to a loan officer from Boston Private. That loan officer listened to the story of a family that desperately needed to move from cramped rental apartment to a home of their own. She told her that there was a mortgage program that might work. It did. And now that family still lives in that same three-family home in Mattapan, with generational equity thanks to that affordable mortgage product from a private bank that a decade earlier had only served high net-worth individuals.

There are several thousand more stories like this.

When Silicon Valley Bank announced that they were purchasing Boston Private, many wondered if this would be the end of these efforts. After all, private banks were not generally leaders in community development. SVB did not originate mortgages to low- to moderate-income buyers in California. Would they in Massachusetts?

SVB’s community development staff, like that loan officer many years before, listened in 2021. They listened to local community groups, to Boston Private staffers, to City of Boston officials. And they committed that they would not only do what Boston Private had done but would provide even more resources. And then they began to do just that. They took the Boston Private commitment to excel at community development and embraced it. And now, like the bank itself, that commitment is gone.

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Tech startups and life science companies are asking who will replace SVB’s lending in those fields. That is an important question, for sure. And there are other local institutions who have shown their commitment to these issues as well. But as a nonprofit working to narrow racial wealth gaps by bringing together financial services institutions and community-based organizations, we have another question: Who else will fill the void left by SVB and its outstanding effort and performance in meeting the credit needs of our lower income households and neighborhoods? Will First Citizens, which stepped forward this week to buy Silicon Valley Bank, come into Massachusetts and continue the proud CRA tradition begun by Boston Private Bank & Trust more than 25 years ago?

Banking regulators, politicians, and the media will spend the coming weeks and months digging deeper into the underlying causes of SVB’s collapse, whether from increased interest rates, social media panic, overreliance on a narrow part of the overall market, or reasons still not fully known. What we can say, however, is that one thing SVB got right was its investment in low- and moderate-income communities in Massachusetts. These crucial investments might not be as flashy as the tech sector, but they provide a profitable return and help build wealth in low-income neighborhoods and communities of color.

Thomas Callahan is executive director of the Partnership for Financial Equity. Symone Crawford is board treasurer of the Partnership for Financial Equity and executive director of the Massachusetts Affordable Housing Alliance.