Yesterday, New York City and Los Angeles overwhelmingly passed responsible banking ordinances, giving new momentum to a trend occurring nationwide. The responsible banking ordinance enables cities and localities to deposit city money into banks that can demonstrate their commitment and investment to the local community. It requires that banks disclose detailed loan and foreclosure data by community if they want to do business with the city.
In New York City, the ordinance passed 44-4, despite vocal opposition from Mayor Mike Bloomberg; in Los Angeles, it passed unanimously. In New York, the effort had been spearheaded by the Association for Neighborhood and Housing Development and had strong support from Council speaker Christine C. Quinn, who is a leading mayoral candidate. In Los Angeles, the bill, pushed by Councilman Richard Alarcon, was based on similar legislation passed in Cleveland, OH and Philadelphia, PA more than a decade ago.
Last month, Pittsburgh, PA also succeeded in passing such a law unanimously after nearly two years of work by the Pittsburgh Reinvestment Coalition Group, a coalition of nonprofit community based organizations. In Pittsburgh, banks have to submit a community reinvestment plan every two years if they want deposits. San Francisco, CA; Berkley, CA; Boston, MA and San Diego, CA are also pushing similar ordinances.
The National Community Reinvestment Coalition (NCRC), an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings has been a vocal supporter of such ordinances and has worked aggressively to organize local advocates to advance such measures. In 2010, NCRC released a model city ordinance to create community reinvestment requirements for depository institutions. According to NCRC, the model ordinance is designed to increase the amount of responsible loans, investments, and financial services in minority and low- and moderate-income communities through heightened public accountability to municipalities and their residents.