Goofy Green Investments Fueled ShoreBank's Problems
A significant portion of ShoreBank Corporation’s progressive vision is investment in “sustainability” and the creation of a “green” economy, which may be part of the reason the distressed lender is in need of a bailout, seeking millions of dollars from Wall Street firms so it will then qualify for funds from the Troubled Asset Relief Program.
For example, ShoreBank has two sub-entities based in the Pacific Northwest: the FDIC-backed ShoreBank Pacific, and the nonprofit ShoreBank Enterprise Cascadia. Both are institutions whose lending criteria are based upon progressively defined notions of “sustainability,” with the bank a partnership between ShoreBank Corp. and the environmental group Ecotrust. The bank’s mission is to “profitably assist businesses, and through them their communities, to be sustainable in economic, social, and environmental practices.” Here’s how they explain their lending criteria:
…Unlike other banks, we are conscientious to whom we lend, and potential customers are "scored" using a program of sustainability criteria, including conservation, community development, and economy measures. Our scoring process should not be seen as a deterrent to the loan process, but rather as an active step toward improving sustainability from the "bottom up". A healthy and sustainable business will translate into a healthy and sustainable community and economy.
The problem with “green” projects is that hardly any of them are economically viable on their own. They require huge government subsidies, tax breaks, or charitable “investment,” or else they won’t survive (or even be started in the first place). A recently announced manure-to-energy project in Lynden, Wash. is illustrative:
Andgar Corporation is the general contractor building the 1.5 million-gallon reinforced concrete digester. It will convert manure from 2,000 dairy cows into a methane biogas, providing enough renewable electricity to supply an estimated 500 houses. Capturing the methane also will reduce greenhouse-gas emissions by the equivalent of 7,000 metric tons of carbon dioxide annually, according to a press release from Farm Power….
The project is funded by a $1.1 million grant from the Washington State Energy Program, a $500,000 USDA Rural Development grant and a $2.4 million bank loan from Shorebank Pacific.
According to its Web site, Farm Power is a start-up company founded by Kevin and Daryl Maas “with no corporation behind us and no fancy marketing…just the two of us (and) a couple dozen local investors….” If the manure digester project was truly profitable for the “investors,” it wouldn’t need huge grants from state and local taxpayers, in addition to a massive loan from a bank that is also looking for a government bailout. Is it judgment calls (and its lending guidelines) like this that got ShoreBank Corp. in trouble in the first place?
In another dubious decision, the lender’s nonprofit organization in Cleveland found this start-up worthy of investment:
The smell of the lacquer at Access-O-Ride Technology in Tallmadge is as intense as the goals co-founders Gary Green and Alissa Harvey have for the newly opened fiberglass company that (Ohio) Gov. Ted Strickland visited July 1...
The Tacoma Avenue company opened with a few employees just days ago after receiving help from JumpStart Inc., a pilot project started by the Ohio Department of Development's Minority Business Enterprise Division to help minority-owned businesses and firms.
After ShoreBank, a Cleveland-based non-profit organization, lent the company $100,000, Green said they could begin their business. Now they are set to produce at least 80 pieces of fiberglass products daily.
"JumpStart's involvement gave ShoreBank a great confidence to invest," said Strickland.
"This is the best thing that's happened to us," said Green. "We hope to grow and eventually have three shifts a day with 50 employees."
So all it takes to get money from a ShoreBank institution is taxpayer subsidization, passion, and hope. Watch as ShoreBank Pacific CEO David Williams explains why they believed the company Flexcar, a vehicle sharing company, was worthy of investment:
Williams described part of ShoreBank’s lending criteria, saying “How is that wealth that’s generated recirculated within the community, rather than being extracted? It is important to us that you’re not owned by some business outside the region. The ownership is local and the money gets recirculated locally.”
So what happened? Flexcar merged and moved in with Boston-based Zipcar in late 2007 and closed its Seattle headquarters, prior to this 2009 ShoreBank video promoting local ownership! But as with the previous examples, all that matters with the progressive model of business are intentions, hope and passion – and more government subsidies, which Flexcar enjoyed via public-private partnerships with local transit authorities.
In October 2007 The Washington Post reported the merger came “after years of losses by both companies:”
"It's a niche that wasn't exploited by the larger traditional car-rental companies," said Chris Brown, managing editor of Auto Rental News. "I don't think it will ever eat into a huge percentage of the $20 billion U.S. car-rental market. It's kind of like this little cult of users that are all in it together in this cool new system."
Cults, hope, change…all befitting an institution worthy of a taxpayer bailout in the eyes of the Obama regime. It appears more and more every day that ShoreBank’s distress isn’t about real estate or economic downturns as much as it’s about the failure of liberal redistribution schemes.