Tim Fernholz asks whether the nation’s largest community bank collapsed because of its social-justice mission — or its financial ambitions.
ShoreBank became a symbol of community-development finance — politicians associated themselves with the bank, and other financial institutions modeled themselves after it. Federal legislation sought by progressives during the Clinton administration gave government support to organizations like ShoreBank. These Community Development Financial Institutions (CDFIs) must make a large percentage of their loans in underdeveloped low-income areas, and in return, receive tax breaks and access to special development funds.