Silicon Valley Bank (David Paul Morris-Bloomberg-Getty Images)
*A Black-owned bank owner is speaking out about the racial disparities of the recent bank bailouts.
The $209 billion-dollar collapse of Silicon Valley Bank is reportedly impacting startups led by women, people of color, and LGBTQ+ individuals. As we reported previously, citing CNN, California regulators closed down the tech lender in March and put it under the control of the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC).
The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors.
As ESSENCE reports, the FDIC issued a statement claiming they would take steps to “fully protec[t]all depositors and depositors would have access to all of their money immediately.”
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President Biden addressed the collapse of Silicon Valley Bank, telling customers their deposits will “be there when you need them.”
“If Silicon Valley Bank was Black-owned, that sort of protection would have never happened like that,” Seke Ballard, founder of BetaBank, a small business-focused digital-banking service, told ESSENCE.
“According to the Federal Reserve, if I go into a bank and a white guy goes into a bank, we have the exact same identical financial profile, and we are applying for a small business loan, I’m 2.7 times more likely to be denied,” Ballard explained. “I’m going to pay 1.8% more on average in interest. This is true across all forms of debt, all forms, whether it’s a small business loan, a mortgage, a personal loan, a car loan.”
Ballard noted that Black-owned banks on the brink of collapse would not be rescued like Silicon Valley Bank.
“The fact that the FDIC came in and said they’d cover all of their deposits showed the clear difference in the way minority and non-minority businesses are treated,” Ballard said.
“Now if that were a Black-owned bank, not only would it have been allowed to fail, but the deposits over $250,000 would have been lost. The FDIC would’ve said ‘sorry, not our problem. 250,000 is the legal limit. Now go deal with it.’ That’s how the FDIC has treated bank failures in the past and I think that’s how they would have treated a bank failure if it were a Black depository institution or if it were a bank that did not have the type of clientele that Silicon Valley Bank had.”
Some of the clientele are business owners who are also social media influencers that have deep political connections, according to ESSENCE.
“They were able to get things done based on their societal standing and it’s really unfair,” Ballard continued.
“If you think about the role that banks play in wealth creation and economic development, it’s absolutely central,” Ballard told ESSENCE. “It’s almost like the heart. The heart is how blood is distributed throughout our body. If blood doesn’t reach a limb or a finger, then it’s going to atrophy. It’ll die. And I think the same exact thing is true of banks IN communities. If banks aren’t distributing capital to aspiring homeowners, business owners and even bank owners then those communities are going to atrophy economically. Something needs to change immediately.”
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