What if NYC lost all its Savings Banks?

ATMs and branches are on every corner - but they represent very few banks.

For the past three decades, ANHD has been following the banking industry as it has changed dramatically over the years.  The most rapid changes have taken place over the last 15 years due to many factors, including the erosion and eventual repeal of the Glass-Steagall Act, followed by the 2008 financial crisis that led to the collapse of hundreds of banks nationwide.  Subsequently, banks have undergone massive consolidations leaving the industry increasingly dominated by regional and national institutions. As a result, while we see bank branches and ATMs on every corner, they represent a smaller set of institutions, and fewer savings banks in particular.  In the past six years alone, we’ve lost such mainstays as Washington Mutual, Sovereign (now part of Santander), North Fork, Wachovia, Queens County Savings Bank, Richmond County Savings Bank, and Roosevelt Savings Bank.  Soon, Apple Bank will merge with Emigrant. Many of the banks have been undermined by problems of their own making, but many are victims of the government policy of low-interest rates, which makes the savings-bank business model especially difficult. One question this raises is, how does it impact our city to lose our savings banks? Each year, ANHD publishes the State of Bank Reinvestment in NYC that analyzes banking trends across the city.  It is common wisdom that savings banks are better attuned to meet the local credit needs of our communities. But in New York City, the majority of savings banks reinvest much less than their commercial and wholesale counterparts.  A crucial area where savings banks shine is in financing multifamily housing, which is one of the most important sources of affordable housing in our city.  But the “bread and butter” products, such as branching services, home mortgage lending, and small business loans are now dominated by the largest banks, especially Chase, Bank of America, Wells Fargo, Citibank, and HSBC. With big banks handling so much, one might wonder if there would not be much consequence if the savings bank industry in our city disappeared.  But that would be overly simplistic.  Fewer banks mean less competition, fewer options, and more opportunities for abuse, as we are seeing with rising banking fees that disproportionally affect lower-income consumers and the recent settlements with a number of national commercial banks for their widespread discriminatory and predatory lending practices. ANHD values and supports local community-based institutions – businesses and nonprofit organizations – that understand and respond to the communities in which they operate.  We believe that all banks need to invest more in community development and lending, particularly in our lower-income neighborhoods. For our savings banks, this local commitment might be a key to survival in an increasingly competitive environment.