Advocates and New Yorkers Demand Banks Be Held Accountable
“It is important that New York City, as a large-scale banking customer, uses its consumer leverage to hold banks accountable for how they serve all New Yorkers and city neighborhoods,” said Councilman Al Vann. “As many homeowners are pursuing mortgage modifications to stay in their homes, countless New Yorkers are searching for affordable housing, and our small businesses are seeking access to credit, it is crucial that our city develops strong partnerships with its depository banks to address those needs. The increased accountability and transparency that would result from this legislation will only help to strengthen banks’ commitments and efforts to adequately serve our communities and assist in community development.”
“Banks that act as city depositories are profiting from the city,” said Councilman Domenic M. Recchia, Jr., chairman of the Finance Committee. “They should be supporting New York’s homeowners and small businesses. This rating system would show which banks are working with their communities, and encourage those that aren’t to engage further.”
“As much as people are frustrated with the abuses and excesses of banks in the wake of the economic crisis, the truth is that the neighborhoods of our city can’t thrive without those banks at the table making loans and investments that meet the needs of our city – for a healthy affordable housing market, for safe singe-family home financing, for small business loans, for branches in working-class neighborhoods,” said Benjamin Dulchin, Executive Director of the Association for Neighborhood and Housing Development. “The Responsible Banking Act will bring increased openness and oversight to hold banks accountable, and to encourage bank business activities that strengthen our neighborhoods”.
“The Responsible Banking Act makes complete sense from public accountability and community development standpoints,” said Sarah Ludwig, co-director of the Neighborhood Economic Development Advocacy Project. “Not only should NYC place its deposits with banks that serve communities, but NYC also should use its tremendous leverage through its municipal deposits to encourage banks to meet community credit and other fundamental financial services needs.”
Josh Silver, Vice President of Research and Policy at the National Community Reinvestment Coalition regards the Responsible Banking Act as model legislation, building upon the laws in Philadelphia, Cleveland, and the bill in Los Angeles: “The New York City Responsible Banking Act is an important legislative model that has the potential to significantly increase capital and credit for this city’s working class and minority neighborhoods, and is on the forefront of a national effort to broaden bank reinvestment oversight and enforcement and increase its effectiveness on a local level. The National Community Reinvestment Coalition applauds the leadership of the New York City Council, Councilmembers Albert Vann and Domenic M. Recchia Jr.”
Communities in New York City are suffering because banks are often failing to the meet the credit needs of our neighborhoods. The current economic crisis has made the issues stark – failing to stop foreclosures on 1-4 family homes, brought about by predatory lending, “predatory equity” lending to large rental buildings, insufficient small-business lending, not opening branches in working-class neighborhoods, and reducing community development lending. There is considerable research documenting these trends and destructive practices. For example, the Association for Neighborhood and Housing Development’s The State of Bank Reinvestment in NYC: 2009 details a significant drop in multi-family and community development lending across the five boroughs. Additionally, the Neighborhood Economic Development and Advocacy Project’s 2010 report, Paying More for the American Dream, shows that since the onset of the economic crisis, banks have significantly decreased prime refinancing lending in predominantly non-white neighborhoods in New York City, while greatly increasing prime refinance lending in predominantly white neighborhoods.
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