Public News Service: Report – Lenders don’t serve NYC Black, Brown communities equitably

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By Edwin J. Viera, Producer

An analysis of big banks in New York City contended they are perpetuating lending disparities.

The New Economy Project report showed banks are not lending to people of color at the same rate they are lending to others. The report noted the banks originated 25 cents in mortgage loans in neighborhoods of color for every dollar they lent in all other neighborhoods, although New York City neighborhoods of color are about equal to all others.

Will Spisak, senior program associate for the New Economy Project, said it is not a new issue.

“We see this predictable, unfortunately, pattern that’s played out throughout history and continues to today,” Spisak asserted. “Whiter communities getting more investment, more services, and better attention from the banking sector, and Black and brown communities continuing to deal with the legacy and continued practice of redlining.”

Banking agencies are working to keep banks in check. The Consumer Financial Protection Bureau recently accused Wells Fargo of discrimination in mortgage loans. The bureau found Black and female borrowers got fewer pricing exceptions than other customers. While Wells Fargo has faced reprimands, Spisak feels more could be done, such as New York City refusing to keep city funds with them.

The report suggested one solution to provide loans to those who need them is creating a public bank. City and state-level legislation has been brought forward, and although it has gained some support, it has yet to be passed.

Spisak pointed out studies about public banking in New York prove it could be beneficial to city and state residents.

“You could get about 18,000 affordable housing units built through a public bank in the first five years,” Spisak contended. “It would create 70,000 plus jobs. We would get about $6 billion lent into neighborhoods of color and lower-income communities within the first five years.”

After several banking institutions were seized by the federal government in 2023, advocates like Spisak feel a public bank would help protect New York’s financial assets. He noted since the bills are new, they are still in the process of garnering support.