New York City will now require banks that want to withhold City deposits to provide detailed plans for what they are doing to eradicate discrimination in their lending and employment practices.
The city will also, for the first time, accept public comments online or in person as part of its biennial process to determine which banks are eligible.
Both actions are designed to help New York make decisions about where to put its deposits.
Ismail Ferdous/Bloomberg
The transparency measures, which were announced Friday morning by the New York City Banking Commission, come less than a year after the city said it no longer open any deposit account at Wells Fargo due to growing discrimination lawsuits against the bank.
The decision to cut ties with Wells Fargo was a factor in the commission’s decision to reevaluate its process for appointing city trustees, city controller Brad Lander said in an interview Friday. Lander is one of three members of the banking commission, along with New York City Mayor Eric Adams and the commissioner of the city’s finance department, Preston Niblack.
“There were several key steps that weren’t part of the process,” Lander said. “We thought it was important to develop a new set of certifications and forms to provide information about the ways in which they are working to meet the needs of our communities and create an opportunity for public comment.”
Every two years, banks must apply to become approved depositories for the city’s billions of dollars of public funds. Each bank must provide a list of documents by March 1 and, in May, the bank commission determines the designated depositories by majority vote.
There are currently 28 banks approved to hold the city’s deposits. The list includes several of the country’s largest banks (names like JPMorgan Chase, Bank of America, Citigroup, US Bancorp, and PNC Financial Services Group), as well as small and midsize regionals like KeyCorp, M&T Bank, and Webster Financial, and some foreign ones. . -property banks.
Wells Fargo remains listed as a designated bank, but has no New York City depositories.
The city’s designated banks have already been informed of the enhanced information they are required to provide, said Louis Cholden-Brown, senior adviser and special adviser for policy and innovation in the comptroller’s office.
Public comments can be submitted through an online portal until May 25, the same day that a public hearing to collect in-person comments will be held, after which the banking commission will determine which banks will be designated depositories. Cholden-Brown said.
Some community organizations and advocacy groups said the city’s new policies are a step in the right direction when it comes to placing deposits at banks that are practicing fair and equitable lending in all communities. They encouraged the city to do even more.
“We hope this is just a first step in deepening community participation, scrutiny and transparency in this public process,” Barika Williams, executive director of the Association for Neighborhood and Housing Development, said in a news release. announcing the changes.
The city’s improved process is “a welcome development,” but there is more work to be done, Andy Morrison, associate director of advocacy group New Economy Project, said in an interview.
His group has long been advocating for a public banking framework at the state and municipal levels. Public banks are lending and depository institutions that are owned and managed by a government entity.
“What is really needed to ensure that public deposits are used for the public good and that they are in the hands of a responsible institution is a public bank,” Morrison said. “We’ve been very clear that this is the ultimate solution.”
There is a chance that New York City’s current list of 28 designated banks will dwindle now that banks are required to disclose more information, Lander said.
“Banks will have to, at a minimum, make claims and fill out forms and provide information,” Lander said. “And I suppose some may choose not to.”
