Wednesday, December 7, 2011

ShoreBank´s Partial Failure and the Financial Crisis

ShoreBank Chicago was an amazing discovery for me back in 1991 or so when I found out about their Ecodeposits program in their pilot version of their ShoreBank Pacific branch.  Six years later, I understand, they opened the offices of ShoreBank Pacific in Ilwaco, Washington.  While I thought their model seemed well-grounded, it seems to have become vulnerable to Wall Street´s massive fraudulent financing crisis.

     The Stanford Social Innovation Review has investigated the collapse of ShoreBank Chicago in a full article.  A brief excerpt follows:

On Aug. 20, 2010, the Illinois Department of Financial & Professional Regulation closed ShoreBank, the nation’s first and leading community bank, and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The closure was not unexpected. Reports of the bank’s problems—and a potential rescue—had been circulating for months. But the closure brought to a bitter end an iconic example of progressive social enterprise. During its 37 years, ShoreBank Corporation became the United States’ leading social enterprise of its kind: its for-profit bank subsidiary was the largest certified Community Development Financial Institution (CDFI) in the nation. Its social impact was significant: more than $4.1 billion in mission investments and more than 59,000 units of affordable housing financed.....

In 1997, ShoreBank became the first banking corporation in the United States to address environmental issues. Through a partnership with Ecotrust, an environmental organization in Portland, Ore., ShoreBank Pacific was created as a federally regulated bank focused on the underbanked area of environmental business development. The mission was timely and the founders viewed it as an opportunity to expand ShoreBank’s deposits and operations.
In each market where ShoreBank created a federally regulated bank, it also created an associated nonprofit—such as ShoreBank Enterprise Cleveland, ShoreBank Enterprise Detroit, and ShoreBank Enterprise Pacific (later renamed ShoreBank Enterprise Cascadia)—which predominantly focused on higher risk business lending. The founders saw these additional activities as critical to their theory of change. Incorporated as nonprofits, the organizations were largely self-financing through their operations, supplemented by grants, and were not financed by the ShoreBank holding company.....

see the rest at:

ShoreBank Pacific was affected slightly differently:

...Separately, ShoreBank Corp. agreed to sell its Pacific Northwest subsidiary, ShoreBank Pacific, to OneCalifornia Bank. Terms of that transaction were not disclosed. ShoreBank Pacific reported $218.2 million in assets of March 31. The purchase, which is subject to regulatory and other approvals, will result in OneCalifornia Bank having combined assets of approximately $300 million.....$44-Bil-in-Assets/122516      Copyright © 1997-2011 CoStar Realty Information, Inc.

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