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Sunday, April 21, 2024

New York City takes a stand against discrimination: Banks face consequences

Crack down on discriminatory banks in New York City, freezing deposits and demanding non-discrimination plans.

New York City has taken a bold step in ensuring fair and non-discriminatory practices within its banking sector. Following a recent public hearing held by the New York City Banking Commission, two major banks, Capital One and KeyBank, have faced restrictions on their deposits due to their failure to comply with anti-discrimination requirements. This move reflects the city’s commitment to holding financial institutions accountable for their actions and promoting inclusivity in lending, employment, and other services.

New Requirements for Non-Discrimination Practices

In February, New York City introduced new requirements that evaluate banks’ commitment to non-discrimination practices. These measures aim to assess banks’ efforts in eliminating discrimination in lending, employment, and other services. As part of the designation process, banks are expected to submit plans demonstrating their commitment to combating discrimination. Unfortunately, Capital One and KeyBank not only failed to submit the required plans but also outright refused to do so, leading to the freezing of new deposits from city agency funds.

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City Officials Take Action

In response to the banks’ non-compliance, New York City Comptroller Brad Lander, along with the mayor’s office and the department of finance, decided to freeze new deposits specifically for city agency funds. This action is a clear message that banks seeking to do business with the city must demonstrate their responsible management of public funds and commitment to being responsible actors in the community.

Impact on Capital One and KeyBank

Capital One, the ninth-largest bank in the United States, held approximately $7.2 million in city deposits at the end of April. KeyBank, based in Ohio, held around $10 million in city deposits during the same period. The freeze on new deposits will last up to two years, while existing contracts will be honoured for one more year. These consequences serve as a reminder to banks about the importance of actively working towards eliminating discrimination.

Voices Heard at the Public Hearing

The public hearing provided an opportunity for various individuals and groups to express their concerns about discriminatory practices in the banking industry. Muslim New Yorkers highlighted discrimination they faced when opening or closing accounts, while black and brown Americans emphasised the issue of racism in accessing financial services. Tenants expressed concerns about predatory lending practices that jeopardise their rights and safety. Climate advocates criticised banks for disregarding net-zero commitments and continuing to fund fossil fuel expansion. Frontline bank staff shared their experiences of illegal and abusive practices, and citizens expressed worries about banks’ involvement in gun manufacturing.

Push for Change and Public Banks

The public hearing showcased widespread support for the idea of a public bank that would prioritise community interests over profit. Annie Levers, the city’s deputy comptroller for policy, mentioned that the issues raised during the hearing have generated increased advocacy for a public bank that invests in local communities.

Contrasting Approaches: Texas and Florida

While New York City is taking a stand against discrimination, some states, such as Texas and Florida, have adopted contrasting approaches. Texas has implemented bills that penalise companies engaging in discriminatory practices against the firearm or ammunition industries and those prioritising Environmental, Social, and Governance (ESG) policies. In Florida, a new law prohibits financial institutions from discriminating against customers based on their religious, political, or social beliefs, while also removing ESG considerations from investment decisions.

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New York City’s recent actions against Capital One and KeyBank demonstrate the city’s commitment to fighting discrimination in the banking sector. By freezing new deposits from these banks, the city sends a strong message that it expects financial institutions to be responsible stewards of public funds and actively combat discrimination. This move highlights the importance of promoting fair and inclusive practices in lending, employment, and other services. It also raises the conversation about the potential for public banks that prioritise community interests and work towards equitable financial services for all.