Silicon Valley Bank’s collapse is leaving a huge hole in Massachusetts’ housing scene. Now, state officials and federal bank regulators – and SVB’s local competitors – need to step up.
Thanks to its acquisition of Boston Private two years ago, SVB played an outsized role in the regional funding pool for affordable housing developments. More than many other banks, Boston Private took the region’s housing crisis to heart and jumped, head-first, into activities like buying affordable housing tax credits subsidized projects use to finance construction.
“They weren’t just a participant; they were a thought partner with us. It’s not just a bank making loans – which is great – it’s also a bank that’s willing to sit across the table from you and have an open-ended discussion about what we could do differently, do better together to meet housing needs,” Massachusetts Housing Partnership executive director Clark Ziegler told Banker & Tradesman.
Worse still, uncertainty surrounds the $11.2 billion community benefits plan SVB announced after buying Boston Private. Large chunks of that were dedicated to financing affordable housing developments. Additional funds were pledged to the Massachusetts Housing Partnership’s ONE Mortgage program for working- and middle-class first-time homebuyers.
The FDIC issued a statement last week that the bridge bank that now controls SVB and whoever absorbs the defunct lender’s mortal remains must honor all “contracts” SVB entered into pre-implosion. Encouraging words, but clarity is needed on just what counts as a contract. Does all of the community benefits deal count, even if the project financing included in it hasn’t been fully deployed?
As they rush to find someone to take the corpse off their hands – as of publication time, no clear buyer has stepped forward – FDIC officials must also get a careful accounting of what SVB had been intending to deliver, and make sure those funds go through. State officials, likewise, should lean on the FDIC and executives at SVB’s eventual buyer to follow through.
And, if this process drags on much longer, Massachusetts’ leaders need to be prepared to issue bridge funding to the many housing projects affected by this crisis. The Boston Globe reported Thursday that as SVB was melting down, the Healey administration quickly sought to arrange contingency funds to help the companies “with money tied up in SVB” continue operations in case the extraordinary federal deposit bailout hadn’t come through. That same urgency must be applied to projects and people that don’t have well-placed friends on Beacon Hill – many who, it must be noted, are still in crisis mode.
Local banks have a time to shine now, too. Hundreds of units or more of affordable housing hang in limbo as tax-credit and other financing deals SVB executives had been moving towards participating in, but where formal deals had not yet been inked. Start scrutinizing your balance sheets. Can you take their place for some of these developments?
In the middle of a housing crisis, Massachusetts can’t afford delay.
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