“As recent bank failures expose bank management and regulatory failures, we would do well to revisit the lessons of Glass Steagall.”

By Kevin Stein,
Chief of Legal and Strategy


JPMorgan Chase acquires First Republic Bank

First Republic Bank became the third bank to fail in the last few months. The Federal Deposit Insurance Corporation (FDIC) sprang into action once again, taking over the bank and selling it to JPMorgan Chase. Among the early reports on the acquisition were those signaling what a good deal Chase got for the purchase, and how the bank would then close 21 branches. While Rise Economy, formerly CRC, had protested First Republic Bank’s (FRB) lending to problematic landlords in the past, FRB was one of the few larger banks to make a positive commitment around climate (no financing of new fossil fuel expansion projects). Yet once again, a bank failed, a big bank got bigger, and communities were left behind. We urge JPMorgan Chase to fund all FRB loans, investments and contributions in the pipeline, halt branch closures in low-to-moderate income (LMI) communities of color, develop measurable and impactful climate commitments, and enter into a Community Benefits Agreement (CBA) with California communities. Read our statement on the acquisition of First Republic Bank by JPMorgan Chase.


First Citizens Bank acquires Silicon Valley Bank

Image of a First Citizens Bank branch.

A monolithic sign identifying a First Citizens Bank branch. Photo credit: Adobe Stock.

Silicon Valley Bank (SVB) made news for being the largest bank failure since Washington Mutual failed during the foreclosure crisis. The FDIC exercised extraordinary powers (by invoking the systemic risk exception) to take over the bank, to guarantee the uninsured deposits of SVB’s wealthiest depositors (deposits over the $250,000 threshold), and to sell SVB to First Citizens Bank. Who got left out? Potentially, California communities. 

A couple of years ago, Rise Economy, then CRC, negotiated an $11 billion commitment for California communities with Silicon Valley Bank, along with The Greenlining Institute’s members and allies from Massachusetts. But the sale of SVB to First Citizens Bank did not expressly incorporate the $9 billion SVB CBA commitment to California. 

Since then, we have engaged First Citizens Bank on several occasions, urging the bank to embrace 100 percent of the SVB CBA and to have that $9 billion supplement First Citizen Bank’s pre-existing $8 Billion commitment to California communities. Ranking member Maxine Waters, Representative Katie Porter and members of the CA Democratic caucus, as well as the Daily Kos have all supported our calls for 100% adoption of the California CBA by First Citizens Bank. How will the bank respond? We plan to meet with representatives of First Citizens next month.


Continued opposition of Washington Federal Bank’s acquisition of Luther Burbank Savings

Earlier this year, we opposed the merger application of Washington Federal Bank to acquire Santa Rosa-based Luther Burbank Savings. Alongside 42 of our members and allies, we raised a number of concerns about the proposed acquisition including: bank financing of fossil fuel companies which hastens climate change, mortgage lending disparities that left behind Asian American Pacific Islander (AAPI) borrowers and communities, lending to problematic landlords, and links to attacks on the Consumer Financial Protect Bureau (CFPB). Read our initial letter for more information on these concerns

To their credit, the leaders of both banks reached out to offer their perspectives and to discuss our concerns and see if they could be addressed. Despite this good faith dialogue, we decided to continue our opposition of the merger due to its expected adverse impacts on communities without further mitigation measures. 

We are hopeful that the banks will enhance, or the FDIC will require, their commitments to transition away from fossil fuel finance while supporting climate resiliency efforts in BIPOC communities in California, redouble their efforts to fight blue-lining (when banks provide less access to innocent communities impacted by climate that are deemed “too risky”), develop a Special Purpose Credit Program for certain underserved, disaggregated Asian American mortgage borrowers in California, and strengthen their CRA and Fair Lending Plans for our state. Check out our discussion of the merger and its implications with  KFPA.  


Bank meetings: Bank of America

In the pre-COVID days of our organization, we met annually with the largest banks. On Thursday, June 15, we held an in-person meeting with representatives from Bank of America. Alongside few dozen members, we discussed the bank’s commitments to racial justice, climate change-related activities, home mortgage lending, small business lending, community development and CDFI investment, as well as the bank’s approach to lobbying and litigation on matters of concern to our members. We’ll soon have more details about the meeting as well as announcements of future meetings with other banks. 


CRA rule

We are at the end of a long process in the latest iteration of CRA modernization and reform. The banking regulators took final comments on the proposed rule changes to CRA months ago, and there is anticipation that they will finalize the new rules during the summer. Banks and community groups look forward to seeing where the agencies land on important issues that will determine how banks allocate their community resources over the next several years. 

Key issues include: 

  • Whether and how the rules account for lending to BIPOC consumers and communities (in contrast to low and moderate-income consumers and communities, as now); 
  • Whether banks will be downgraded for harming communities (not mainly rewarded for positive investment, as now); 
  • How CRA can better encourage banks to invest in climate resiliency and transition away from activities that exacerbate climate change; 
  • Will community development investments like Low-Income Housing Tax Credits be further encouraged or have a diluted impact; 
  • Will banks have new CRA responsibilities where they make loans and/or receive deposits (as opposed to only around branches, as now); 
  • And will community voices be elevated amongst other issues?

 You can read our comments on the proposed rule


1071 rule

Image of a group of people posing for a photo on a stage.

Rise Economy and members pose with CFPB Director Rohit Chopra during the NCRC Just Economy Conference in 2023.

On March 30, before a packed house at the NCRC conference, CFPB Director Rohit Chopra announced the final small business data disclosure rule, known as Section 1071, from the Dodd-Frank Act of 2010.  This was one day before the deadline agreed upon by CFPB and our organization in the settlement of our case brought a few years ago against the bureau for its failure to develop the rule as authorized by Congress. The rule will require certain small business lenders to report the race, ethnicity, LGBTQIA+ status and neighborhood of small businesses applying for credit, whether they received the credit, and at what price. We have been engaged in the fight for this data collection for years. 

While we did not get everything we wanted to see in the final rule (see our comments on the proposed rule), we do believe that it will be transformational for small business access to credit, will help identify outlier lenders that may be violating fair lending laws, and will aid local governments, financial institutions, and community groups working to identify gaps and needs of small business communities. We’re grateful to our members who pushed for this rule for so long, and for our allies at Democracy Forward, NALCAB, and Main Street Alliance who worked with us to push forward the lawsuit that finally brought the rule to fruition. Read our statement on the finalization of the rule.


Glass Steagall turns 90

June 16 is the anniversary of the Glass Steagall Act of 1933. The law means different things to different people. For most, it represents the effort by Congress to prevent the mixing of commercial banking (which we want to be safe) and investment banking (where risk-taking is more prevalent). Glass Steagall was part of a broader attempt to increase confidence in the banking system after several banks failed during the Great Depression. But subsequent deregulatory pressure and lobbying from financial interests led to the repeal of Glass Steagall via the Gramm Bleach Bliley Act of 1999. The result of this rollback was predictable and predicted – large institutions got much larger, riskier and harder to regulate.  Sound familiar? 

As recent bank failures expose bank management and regulatory failures, we would do well to revisit the lessons of Glass Steagall. Bigger is not always better, especially where the stability of our financial system and its ability to serve as a positive influence in communities is concerned.