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NYC RBA on Trial AGAIN
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NYC’s Responsible Banking Act on Trial AGAIN
(ANHD blog date – 7/6/15)
For the second time in two years, the Responsible Banking Act (RBA) is on trial in US District Court, where the New York Banker’s Association’s claims were dismissed once before. We hope the court allows the RBA to go forward again. Tens of billions of New York City’s dollars flow to and through banks that hold roughly $6 billion in deposits at any given time. The RBA lets the city use the power of that money to hold banks accountable to better meet the needs of our local communities.
Unlike the first time when the RBA was stalled due to the lawsuit, however, this lawsuit is not stopping the RBA’s progress. The new Community Investment Advisory Board conducted independent research and held a series of public hearings in early 2015, leading to the publication of the first ever Needs Assessment outlining critical credit and banking needs of NYC neighborhoods. The CIAB is collecting additional data from banks in anticipation of the first Annual Report regarding how banks are meeting these needs. The CIAB will hold a public hearing 6pm on September 9th to solicit input from the public on how banks are responding to these needs.
The New York Bankers’ Association (NYBA) is doing everything it can to stop this important transparency law. Similar to the first lawsuit, NYBA is once again claiming that the law is regulatory and thus preempted by state and federal law. It further goes on to claim that the banks will suffer irreparable monetary and reputational harm if they are labeled as non-compliant or as performing below standards, and even worse if they are removed as a designated depository bank. Nothing could be further from the truth.
The RBA is a common sense tool to encourage more high quality reinvestment and basic banking activity and increase transparency among the banks that seek to hold our deposits and do business with our city. The RBA is an important transparency law that will provide data at a local level to help the city and the community better understand how these banks are meeting the credit and banking needs of our community. The public hearings provide us an opportunity on a regular basis to respond to this data by calling out banks to change when their practices are causing harm to our communities and encourage banks to continue and expand upon good practices that are helping.
The city has a strong interest in ensuring banks act responsibly because they suffer the consequences when banks do not. NYC has lost millions in property taxes due to the foreclosure crisis and tens of thousands of rent-regulated units due to irresponsible multifamily lending on the part of non-bank and bank lenders alike. New York residents, businesses and nonprofits suffer loss of wealth and opportunities without adequate access to bank accounts, loans, and investments.
The Needs Assessment echoes this reality. Through data analysis and public participation by NYC residents and nonprofits, the City has a comprehensive analysis of the credit and banking needs of NYC residents, businesses, and organizations. As ANHD outlined in aprevious blog, the needs assessment highlights the disparities in home loans, business loans, and branches for lower-income and minority people and neighborhoods. The public comments echoed the need to address these disparities and other needs, including affordable bank products; equal access for immigrants; assistance for homeowners in or at risk of foreclosures; and support for nonprofit developers and community organizations. The health of New York City residents and neighborhoods depends upon banks acting responsibly and responding to these needs in a meaningful way.
The power of this bill comes not from any new regulatory powers by the City, but rather from the people. If all the RBA did was to gather and publish data and issue reports, nothing would happen. The power comes from people participating in the process to ensure that the banking commission and the City at large have information that truly reflects the vast experiences of our diverse neighborhoods and people, including banking needs and how banks are responding.
What can you do?
- Organize! Talk to your friends and neighbors about banks and community needs. Join a community organization – ANHD members are perfect! Attend local meetings!
- Show up! There is strength in numbers: Get the word out and encourage other people to get involved
- Speak up! Make comments at the public hearings (or in writing) about your community needs and how banks are responding. Next Public Hearing for Annual Report: September 9, 6pm, 209 Joralemon St., Brooklyn, NY (Courtroom – floor 2).
Click HERE to learn more about the RBA and how you can participate.
Click HERE for NYC’s RBA-CIAB page.
Community Investment Advisory Board members include the following representatives:
- Mayor: Peter Hatch
- Commissioner of Finance: Jeffrey Shear
- Commissioner of Housing Preservation and Development (HPD): Tracey Gardner
- Comptroller: Brian Cook
- Speaker of the City Council: Tanisha Edwards
- The City’s banking industry (appointed by the Mayor): Blondel Pinnock, Carver Bank
- Community development, housing, and/or consumer protection organizations (appointed by the Speaker): Bernell Grier, NHS NYC
- Small business owners (appointed by the Speaker): Chris Kui, AAFE
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