The Association for Neighborhood and Housing Development (ANHD), New Economy Project, Legal Services NYC, and the National Community Reinvestment Coalition (NCRC) are profoundly disappointed that a U.S. district court has ruled in favor of the banking industry in striking down the NYC Responsible Banking Act (RBA). The RBA is an important transparency law that would allow the City to collect information about how well banks are serving local communities, and to consider this information when deciding where to place its deposits. Our organizations, several of which filed a detailed amicus brief in the case, call on the City to appeal this decision.
Judge Failla’s ruling that the RBA is preempted by state and federal banking laws effectively stops the law in its tracks. ANHD, NCRC, Legal Services NYC and New Economy Project strongly disagree. It is a privilege – not a right – for banks to hold city deposits, and the City has every right to consider banks’ records of community reinvestment, among other information, when designating banks as municipal depositories. Gathering and considering such information is a legitimate exercise of the City’s powers and does not infringe on state or federal authority.
Since the implementation of NYC’s Responsible Banking Act, the law has already proven beneficial. The Community Investment Advisory Board established by the RBA was fully constituted and has conducted a comprehensive needs assessment of local credit and banking needs. The needs assessment, based on public data and vital community input, highlights long-standing disparities in access to bank branches, services, and lending across NYC communities. If allowed to proceed, the RBA would create mechanisms through which banks would report to the City whether and how they are meeting – or plan to meet – those needs.
Responsible banking practices are essential to the health of our City and its neighborhoods, and the City is well-justified in using its leverage as a major depositor to encourage banks to meet local needs. The RBA is a common sense tool that numerous cities across the U.S. have used to measure and incentivize reinvestment and increase public transparency.
“We are greatly disappointed that the court struck down the Responsible Banking Act,“ said Benjamin Dulchin, Executive Director of ANHD. “The RBA is a critical transparency law with one of the strongest public engagement components in the country to help our communities better understand and shed light on how banks are responding to local needs. Responsible banking is of critical importance to low- and moderate-income NYC residents and neighborhoods. While we just lost a valuable tool to encourage responsible banking, our communities will continue to engage in this issue and we hope the city appeals the decision.”
“The RBA is a vital mechanism for ensuring public input and transparency,” said Deyanira Del Rio, co-director of New Economy Project. “It’s shameful that the banking industry is fighting against a law that seeks to provide our communities with a better understanding of local banking needs and practices.”
“We are very disappointed in this decision,” said NCRC Chief of Membership and Policy Jesse Van Tol. “The New York City government should have the ability to gather the information needed to make informed decisions on which banks it hires to hold its municipal accounts. That’s what this ordinance does; it does not interfere with or impede state or federal bank regulatory measures. The city has a significant interest in banking with institutions that are a positive presence in New York. NCRC and its members will keep fighting to address a lack of neighborhood investment around the country, and the instability it causes. Getting the banks to invest responsibly is a problem that is of concern to Mayors around the country, and the ruling out of New York doesn’t negate that concern. In fact, it adds fuel to the fire.”
ANHD, New Economy Project, Legal Services NYC and NCRC call upon New York City to appeal this decision so this urgent transparency law can finally move forward as intended.