The chief executive of the federally funded Los Angeles Community Development Bank stepped down Friday to return to the private sector, a little more than three years after he was hired to remake the beleaguered institution.
William H. Chu begins a new job April 1 as CEO of City of Industry-based United Pacific Bank, a small institution he headed a decade ago. His move comes as the Community Development Bank -- funded by the U.S. Department of Housing and Urban Development and overseen by the city -- faces closure if it cannot find a way to operate privately.
The federal government's largest response to the 1992 riots, the $430-million bank was designed to revitalize poor neighborhoods by financing businesses there and creating jobs. It was plagued by early problems: a battered loan portfolio, lawsuits from borrowers, and a controversial venture capital program that channeled $29 million into risky high-tech start-ups that did virtually nothing to serve the bank's low-income targets.
The bank remains out of compliance with its federal mandate, and the city has ordered it to phase out within the year -- slightly ahead of schedule. But its worst troubles are behind it: There is only one legal matter pending against the bank, and the venture capital portfolio is being sold.
"If this opportunity came about a year ago, I would not have taken it," said Chu, who left his native Hong Kong alone at age 16 to become a banker. "It would have looked like I was jumping ship. But today is a different story.... I could leave with a clear conscience. I've stabilized the ship."
Steve Valenzuela, the bank's executive vice president and chief operating officer, will take over as CEO.