New York City withholds new deposits at five banks accused of inaction over discrimination

New York City withholds new deposits at five banks accused of inaction over discrimination

Holding banks to a new standard.

New York City withdraws business from banks that lack anti-discrimination plans.

Following the first-ever public hearing held by the New York City Banking Commission yesterday (May 25), the three members voted to limit deposits at Capital One, the ninth-largest bank in the United States, and at KeyBank. Authorities alleged that the two banks not only “failed to submit required plans demonstrating their efforts to eradicate discrimination,” but also “categorically refused to submit required policies,” according to their press release.

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As a result, New York City Comptroller Brad Lander joined the mayor’s office and the finance department in freezing new deposits at banks. (The shutdown applies only to city agency funds, not New York residents.)

The latest actions are the result of new requirements introduced in February that assess banks’ commitment to non-discriminatory practices in lending, employment and other services.

Quote: Demand equity from banks

“Banks wishing 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 opportunities 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 address discrimination. in their operations and are not responsible stewards of public funds. ” —NYC Controller Brad Lander in a May 25 statement.

The verdict of the New York banking commissions, in numbers

26: Banks that received approval at the Banking Commission’s first-ever public hearing, based on their non-discriminatory practices, and further scrutiny of soundness in light of recent bank failures. All applicants passed the strength test, including assessment of unrealized losses, uninsured deposits and capitalization ratios of banks seeking to hold funds on behalf of municipal agencies.

5: The number of banks, including Capital One and KeyBank, that failed to comply with the designation process. The other three banks that the comptroller voted against holding public funds are the International Finance Bank, PNC Bank and Wells Fargo, which currently hold no city deposits.

$7.2 million: The amount of Virginia-based Capital One city deposits held at the end of April in 108 accounts

$10 million: The amount of Ohio-based City KeyBank deposits held at the end of April in three accounts

Up to 2 years: The duration of the freeze on new deposits in Capital One and KeyBank

1 year: How much longer can Capital One and KeyBank service existing contracts for

A non-exhaustive list of banking practices denounced in open court

During the public hearing, the Banking Commission heard testimony from a wide range of residents:

☪️ Muslim New Yorkers who have experienced discrimination in the process of opening or closing accounts. Racism has been a problem for black and brown Americans trying to join the financial system.

🏘 Tenants worried about banks’ predatory lending practices that jeopardize their rights and safe living conditions. This contributed to the downfall of the defunct Signature Bank.

🌡️ Climate advocates who condemned banks that continued to lend billions of dollars for fossil fuel expansion, ignoring their net zero commitments.

🏦 Frontline banking staff facing illegal and abusive practices.

🔫 People are worried about banking contributing to the manufacture of guns.

The public airing of the issues has resulted in “support for the idea of ​​a public bank that instead puts those dollars to work for our communities,” Annie Levers, the city’s deputy comptroller of policy, said yesterday.

The other side of the coin: Texas and Florida penalized “woke” banks

While New York City features community reinvestment and fair credit practices in its criteria for overseeing financial institutions, some red states do the opposite.

For example, two 2021 Texas bills prohibit state government entities from doing business with companies that discriminate against the firearms or ammunition industries, those that prioritize environmental, social and governance (ESG) and boycott energy companies. In March of this year, the Texas Comptroller added HSBC to its “blacklist” due to the bank’s refusal to fund new oil and gas projects.

Earlier this month, Florida Governor and 2024 Republican presidential candidate Ron DeSantis signed into law a February bill prohibiting major banks, trusts and other financial institutions from discriminating against customers for their religious beliefs, political or social, “including their support for securitization”. the border, owning a gun, and increasing our energy independence,” as well as considering ESG in all investment decisions at the national and local levels. The law, which is set to take effect July 1, eliminates, in DeSantis’ words, an “ideological litmus test.”

Related stories

👩‍⚖️ Goldman Sachs pays $215 million to settle sex discrimination case and avoid embarrassing lawsuit

🏠 Wells Fargo is being sued for mortgage discrimination – again

🚫 Texas blacklisted HSBC over bank’s refusal to fund new oil and gas projects

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