New York City is taking its business away from banks that don’t have anti-discrimination plans.
Following the first-ever public hearing held yesterday (May 25) by the New York City Banking Commission, all three members voted to restrict deposits at Capital One – the ninth-largest bank in the US – and KeyBank. Authorities alleged that the two banks not only “failed to submit the required plans to demonstrate their efforts to eliminate discrimination,” but also “outright refused to submit the required policies,” according to their press release.
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As a result, New York comptroller Brad Lander joined the mayor’s office and the Treasury Department in freezing new deposits in the banks. (The halt only applies to city agency funds and not New York City residents.)
The most recent actions are the result of new requirements introduced in February that assess banks’ commitment to non-discrimination practices in the provision of loans, employment and other services.
Citable: demand honesty from banks
“Banks seeking to do business with New York City must demonstrate that they will be responsible stewards of public funds and responsible actors in our communities. Unfortunately, despite several options to do so, five banks have failed to comply with the New York City Banking Commission’s designation process, leading us to conclude that they are not taking meaningful steps to combat discrimination in their operations and are not responsible stewards of public dollars . ” —NYC Comptroller Brad Lander in a May 25 statement.
The verdict of the New York City banking commissions, in the numbers
26: Banks that received approval at the Banking Commission’s first-ever public hearing, based on their non-discrimination practices and stricter scrutiny of soundness in light of recent bank failures. All applicants have passed the soundness assessment, which includes assessing unrealized losses, uninsured deposits and capitalization ratios of banks seeking to hold funds on behalf of city agencies
5: The number of banks, including Capital One and KeyBank, that failed to comply with the designation process. The other three banks the comptroller voted against are International Finance Bank, PNC Bank and Wells Fargo, neither of which currently hold City deposits.
$7.2 million: The amount of City deposits from Capital One of Virginia at the end of April in 108 accounts
$10 million: The amount of City deposits Ohio-based KeyBank held in three accounts at the end of April
Up to 2 years: The duration of the freeze of new deposits in Capital One and KeyBank
1 year: For how much longer can Capital One and KeyBank maintain existing contracts
A non-exhaustive list of banking practices exposed at the public hearing
During the public hearing, the Banking Commission heard testimony from a wide range of residents:
☪️ Muslim New Yorkers who experienced discrimination when opening or closing accounts. Racism has been a problem for black and brown Americans trying to enter the financial system.
🏘 Tenants are concerned about predatory lending practices from banks that endanger their rights and safe living conditions. It contributed to the demise of the now-defunct Signature Bank.
🌡️ Climate advocates who condemned banks that continued to borrow billions of dollars for fossil fuel expansion, ignoring their net zero obligations.
🏦 Front-line banking staff who experienced illegal practices and abuse.
🔫 People were concerned about banking operations contributing to weapons production.
The public airing of issues sparked “support for the idea of a public bank that would instead put those dollars to work for our communities,” Annie Levers, the city’s deputy comptroller for policy, said yesterday.
The flip side: Texas and Florida penalized “awake” banks
While New York City incorporates community reinvestment and fair credit practices into the criteria for overseeing financial institutions, some red states do the opposite.
For example, two 2021 Texas bills prohibit government agencies from doing business with companies that discriminate against the firearms or ammunition industry, prioritize environmental, social and governance (ESG) policies, and boycott energy companies. In March this year, the Texas regulator added HSBC to its “black list” over the bank’s refusal to fund new oil and gas projects.
Earlier this month, Florida Governor and 2024 Republican presidency hopeful Ron DeSantis signed a February bill that would prohibit major banks, trusts and other financial institutions from discriminating against customers because of their religious, political or social beliefs, “including their support for securing the border, owning a firearm and increasing our energy independence,” as well as excluding ESG from all state and local investment decisions. The law, which goes into effect July 1, eliminates, in DeSantis’s words, an “ideological litmus test.”
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🏠 Wells Fargo is sued again for mortgage discrimination
🚫 Texas blacklisted HSBC over bank’s refusal to fund new oil and gas projects
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