The City Council held a hearing Monday morning before an overflow crowd on the recently introduced “Responsible Banking Act,” which would create a ranking system of banks based on how responsive they are to the credit needs of the city’s neighborhoods. The hearing was followed by a gathering of Council members, advocates and community residents on the steps of City Hall.
The bill, which is called Intro 485, would require the Commissioner of Finance to establish a classification system that would rank city deposit-taking banks based on their community involvement. Some of the practices that the bill is trying to avoid include predatory lending and a failure to locate branches in working-class neighborhoods. In classifying banks, the Commissioner of Finance would also look at whether local banks work with borrowers to restructure delinquent home mortgages and whether they provide sufficient funding, including construction loans, for affordable housing and economic development projects in low- and moderate-income communities.
At least one city official, however, noted a key weakness of the bill—the fact that it fails to require the City Council to move deposits from low-ranked banks to higher-ranked banks.