ANHD 2016 Building the Community Development Movement
The Association for Neighborhood and Housing Development (ANHD) recently released its annual report, State of Bank Reinvestment in NYC: 2013 analyzing the local impact of the Community Reinvestment Act (CRA), highlighting industry trends, and identifying and comparing how individual banks do or don’t meet our City’s credit and banking needs.
The major findings of the Report (bulleted below) show that while locally held deposits in the 24 largest banks in New York City increased 22% in 2011, the
volume of dollars reinvested did not keep pace in every category of reinvestment. The Report provides concrete ways that NYC banks can better meet the credit and banking needs of NYC’s low- and moderate-income residents and neighborhoods.
In addition to these findings, the Report brings to light that the City is banking extensively with the Boston-based State Street Bank Trust which has no obligation under the Community Reinvestment Act to reinvest in our communities. State Street handles the short-term investment of New York City treasury funds. The City’s annual revenue and expenses total over $143 billion, with an average of roughly $6 billion in daily cash balances. Most of that cash is managed and invested by State Street, only to be transferred to the Treasury when it is needed for day-to-day operations. The majority of the City’s daily banking services are provided by the Big Four banks: Citibank, Chase, Wells Fargo, and Bank of America. State Street also provides management and advisory services to some of the City’s pension funds and was recently awarded the Master Custodian contract for the City pension funds, providing coverage for all asset classes held by the $137 billion pension system, including equity, fixed income, private market accounts, and hedge funds.
New York City should leverage its economic power by handing its business to financial institutions with healthy track records for meeting the service, credit,and reinvestment needs of our City’s diverse neighborhoods.
Major findings from the Report include:
- Locally held deposits in NYC’s 24 largest banks increased 22% in 2011 but the volume of dollars reinvested did not keep pace in most areas.
- The number of bank branches changed little in 2011, but most branches are clustered in mid- and lower Manhattan, with fewer in the outer boroughs. Some neighborhoods still have no branches at all. Barriers such as cost and requirements to open accounts can make basic banking unaffordable and inaccessible to working-class New Yorkers.
- Multifamily lending more than doubled in 2011. Indicators of distressed multifamily housing seem to have decreased, but speculative loans still pose a threat to affordable housing. No public data exists to indicate an over-leveraged building in good condition, which means that regulators should look at other risk factors and work with tenant organizers to identify patterns of harassment and neglect.
- Community development lending and investments decreased considerably from 2010, while lending to nonprofits increased. However, comparing average loans and investments between 2008-09 and 2010-11 shows longer term trends of increasing reinvestment.
- Philanthropy increased 15%, but the number of grants remained mainly flat. The amount given to neighborhood-based organizations increased 38%. Banks continue to dedicate a very small percentage of their deposits to CRA-eligible grants – an average of 0.02% in 2011.
- 1-4 family home purchase and refinance lending decreased nearly across the board, only increasing in refinance lending to low- and moderate-income borrowers.
- The number of small business loans increased 22% overall and by 26.8% in low- and moderate-income census tracts.
Jaime Weisberg: Research & Author
ANHD blog team: Benjamin Dulchin, Moses Gates, Ericka Stallings, Jaime Weisberg, Barika Williams, Eric Williams. Anne Troy, editor.