Cities question big bank practices
High home foreclosure rates and frustration with perceived big bank indifference have led some cities to consider a drastic step – pulling their money out of major banks to encourage them to be better corporate citizens. So-called “responsible banking” ordinances have been introduced or discussed in several cities including Los Angeles, Oakland, Pittsburgh and Kansas City, Mo.
In Los Angeles, according to The Associated Press (AP), the City Council in March voted unanimously to authorize the city attorney to draft an ordinance that would require banks that have contracts with city agencies to show how they invest in the community. The proposal, which has been under debate for two years, would require banks to provide information on “how much is given out in loans to small businesses and homeowners, and the number of foreclosures, branches and jobs in low income areas,” according to AP.
In Pittsburgh, the City Council on March 28 delayed action on a similar proposal. That measure would require banks doing business with the city to “reinvest our dollars back into our community,” said the bill’s sponsor, Councilman Bill Peduto, according to Essential Public Radio. The council voted to delay the measure, first introduced more than a year ago, to get advice from the city’s legal department and controller.
The Oakland City Council is weighing a measure to look at bank foreclosure practices before renewing its contract with Wells Fargo in January. Concern over foreclosure practices also led officials in Kansas City, Mo., and Brockton, Mass., to consider responsible banking ordinances.
City officials have responded to growing demands from activist groups and homeowners facing foreclosure. But none of the cities have reported actually closing accounts or moving money out of big banks, actions that could pose significant financial and legal challenges.