ANHD 2016 Building the Community Development Movement
Responsible Banking ordinances are taking roots and growing! ANHD congratulates Boston for passing one of strongest, if not the strongest, Responsible Banking Ordinances (RBO) in the country! On September 18th, the Boston City Council unanimously passed the “Invest in Boston” ordinance sponsored by Councilor Felix G. Arroyo ensuring that the City of Boston will only do business with banks that act responsibly in their city. They are the fourth major city to pass an RBO in just the past two years, following New York City, Los Angeles, and San Diego.
The “Invest in Boston” bill lays out clearly defined expectations for banks seeking to hold Boston’s municipal deposits. Banks must demonstrate a commitment to fair lending and responsible banking to homebuyers, homeowners, small businesses, and consumers, with an emphasis on better serving historically redlined and underserved neighborhoods and residents. This includes strong foreclosure response and prevention and a strong track record and plans for reinvestment through community development loans and investments.
Central to the bill is its community involvement component. Banks will be evaluated by a 10-member Community Reinvestment Commission comprised of government, community, and industry representatives who will gather and release the data and hold public hearings for the community to respond. They will produce a final report compiling all of the data and showing how banks rank to one another. Banks that rank in the bottom 25% as compared to their peers will be ineligible to hold City deposits, while banks at the top 25% stand to gain more City business.
This bill contains all of the best practices laid out in the “Keeping Banks Accountable to our Communities”report produced by ANHD and the National Community Reinvestment Coalition (NCRC). ANHD helped pass New York City’s Responsible Banking Act in 2012 that also has many of the best practices, most notably the community engagement piece. We are eager to work with the next administration to fill the vacant seats on the Community Investment Advisory Board and promptly implement the new law.
ANHD blog team: Benjamin Dulchin, Moses Gates, Ericka Stallings, Jaime Weisberg,
Barika Williams, Eric Williams. Anne Troy, editor.
This is a VERY welcome development. As Cities struggle with economic devastation from man made and natural disasters, they face diminished support from state and federal government. With the foreclosure crisis we saw that, by the time money and programs reach cities, they are often diluted or do not give municipal authorities the flexibility to apply the aid in a way that reflects local needs.
Additionally, the Community Reinvestment Act has lost its teeth over the years as regulators have failed to hold banks accountable for poor performance. Banks barely get a slap on the wrist for blatantly bad practices. They go on about their business with impunity.
If cities can use RBO’s to leverage their assets as carrot and stick, they can take an active role in influencing bank and developer behavior to the benefit of their “investors,” the citizens. Consumers can spend money with businesses that share their values. City governments must recognize the power of the little money they have. They should spend and invest it where it is appreciated and in a way that the economic “love” is reciprocal!