March 26, 2009 / Green Banks Enter — and Exit — The Fray
Our Green Journey
Galley Eco Capital
March 25 has turned out to be a day of beginnings and endings for green banks.
US Green Bank Act aka The Green Bank that “Might Be”
Today US representative Chris Van Hollen introduced the US Green Bank Act of 2009, which — if passed in its proposed form — would result in the federal government establishing and owning a tax-exempt bank that would operate solely for the purpose of providing clean energy and energy efficiency financing, plus some related, unspecified green finance products.
Bill sponsors proposed that the US government capitalize the bank with $10 billion in “Green Bonds”, which would grow to $50 billion.
Frankly I’m torn: between supporting the US Government (potentially) putting its money where its mouth is with green energy, energy efficiency and quietly worried about whether Uncle Sam is really any better at running a bank than the rest of us finance professionals.
We were shocked to see that, given the national media’s spotlight on banks and the federal government’s many actions on funding green initiatives, this particular announcement received virtually no national press whatsoever. It did receive some attention in the renewable energy and green business camps, however.
One Earth Bank aka The Green Bank that “Might Have Been”
And fortunes hit the wall for Austin-based One Earth Bank. The Bank’s ownership, which included several Texas heavy hitters, decided to call it quits on their efforts to obtain FDIC approval for their proposed $23 million dollar bank, due to (in their words) a bad market for starting banks. [No kidding...]
The story puts the FDIC approval problem down to the investors characterizing the bank as a “green bank” in their FDIC discussions. They eventually understood over time that FDIC officials were more interested in a plain vanilla bank structure and were not as excited about approving any type of special green bank in today’s tough banking climate that might potentially veer off the path of typical banking. The article information does not provide details on any specific products or services One Earth proposed to offer that would have been different from any other bank.
I’m not sure whether this particular green bank’s demise represents a lesson for green finance as a whole. There are a few green shoots within the banking market, trying to tweak their plain vanilla banking services with green touches, leaving us unsure about the real impact that they are accomplishing. I’m sure that, as the economy turns around, we will see more attempts to reshape traditional finance into providing greater support for sustainability.
You can read more on green banks in these related posts:
ShoreBank Pacific Leads with Green Building Loan Program
Bankers Call for More Green Banks
Copyright Galley Eco Capital 2009. Used with permission.