“A billion dollars would get people’s attention”: Support for solutions to increase lending in minority neighborhoods

0


In response to reports from the WFAA, some elected officials are investigating how local government can hold banks accountable to ensure fair lending.

DALLAS – Banks lend relatively little money to the largely minority who live under Interstate 30 in Dallas. Now support is being put in place for a solution that could help change that. It’s called a responsible banking regulation.

You may not notice, but local governments keep your tax dollars in banks – the same banks that we all use. Responsible banking regulation requires a local government to evaluate how well a bank serves all of its citizens, from high-income to low-income, before deciding whether to do business with the bank.

The concept was developed in part by the National Community Reinvestment Coalition, which advocates greater reinvestment by banks in low-income to low-income areas. The coalition has drawn up a model law that local governments can operate under.

Jaime Resendez, a Dallas City Council member, learned of the potential of such a regulation from a WFAA report and now says he supports its passage. He represents the Pleasant Grove area below Interstate 30.

“I can’t see much, if any, resistance at the community level,” Resendez said. “I am very interested in moving forward and looking into the possibility of responsible banking regulation. Here in Dallas, it’s long overdue. “

Resendez said he was working with Dallas’ city administrator and attorney on the details.

“The City of Dallas supports responsible banking practices that ensure investment in all areas of the city, and we look forward to increasing our work with our banks to achieve these goals,” said Elizabeth Reich, the city’s chief financial officer, in a statement WFAA. “We are considering whether to pursue a regulation and are looking into all related issues.”

No local government in North Texas has such a policy. However, there are responsible banking regulations in 13 cities across the country, including Cleveland, Minneapolis, Los Angeles, Kansas City, and Pittsburgh. In theory, the idea works because local governments are good banking customers and this gives them leverage.

Earlier this year we asked some local government agencies which banks they use and how much they deposited in late February. The total was $ 917 million in taxpayers’ money.

  • Dallas uses Bank of America with $ 257 million in deposits.
  • Dallas County also uses Bank of America with $ 215 million.
  • Dallas ISD has deposited $ 39 million with Wells Fargo.
  • The Parkland Hospital District has $ 6.7 million with JPMorgan Chase, $ 28 million with Regions Bank and $ 371 million with BNY Mellon.

Dallas County Judge Clay Jenkins also supports responsible banking regulation. Depending on the time of year, bank deposits were well over a billion dollars.

“I spoke to some people with Goldman Sachs and they confirmed that a billion dollars would get people’s attention,” Jenkins said.

Banks are required to provide credit information that shows how much they are lending and which neighborhoods they are lending in, as well as a reinvestment plan that sets targets for future lending. Local governments create a supervisory body to assess banks, publish results, and hold community hearings.

Jenkins is organizing executives from the county, city, parkland, Dallas College District, and DISD to work on a solution.

“The important thing is that banks know that there are certain metrics that a large group of tax authorities are dealing with,” he said. “And those metrics refer to more credit to people of color, to small businesses south of 30, and to groups that have been excluded from the process. I think this will have a good effect. “

It worked well in Philadelphia, which passed its ordinance over two decades ago. Philadelphia combines several factors to rank banks on how well they distribute mortgage and business credit in low-income areas.

Between 2008 and 2018, Philadelphia banks opted for deposits with more active lenders and increased their share of business loans in low-income census areas by 18%.

Do you have a story tip? E-mail [email protected].



Source link

Share.

About Author

Comments are closed.