Chicago aldermen push banks towards fairer lending
Chicago City Council This Week Is Pressing Banks To Improve Their dismal mortgage files in black and Latino neighborhoods, using a pair of auditions to raise the temperature.
Aldermen on Monday refused to vote on an annual measure certifying 13 banks as “municipal depositories,” and openly questioned why the city should keep its money with banks that do not lend fairly.
“JPMorgan Chase only made 1.9% of its [home purchase] loans in black communities. Bank of America, 2.89%, ”Ald said. Daniel LaSpata, 1st Ward, at the finance committee hearing, citing WBEZ and City Bureau reports. “How do we make the point to the people of Chicago that these institutions should generate income for our city? “
At any given time, Chicago has $ 400 million to $ 500 million in the bank, according to the city’s treasurer’s office, and uses major banks – including Chase, Fifth Third, BMO Harris, and PNC Bank – to collect payments, pay its bills. and for its operations. like payroll.
“We have to get our feet on the ground,” Ald said. Greg Mitchell, whose 7th Ward on the South East side covers part of the South Shore. “If we want to do business with you, we need reciprocity. There are things we need in our city, from homeownership to small business loans.
This is the first time in recent years that there has been a debate in City Council over which banks hold city funds. It comes after WBEZ and City Bureau documented gaping racial disparities in home purchase loans last year, with entire neighborhoods seemingly marked in red, and also after a summer of street protests demanding racial justice. triggered by the murder of George Floyd by police in Minneapolis.
If the aldermen do not take a vote certifying municipal depositories, all currently licensed banks can continue to do business with the city.
The aldermen seek a conversation with the banks
Aldermen also lambasted banks that hold city funds for refusing to participate in a second hearing scheduled for Friday, this one on fair mortgages.
“Time and time again, many of these institutions have failed to show their support for the Chicago communities that need it most,” Ald said. Harry Osterman, 48th arrondissement. “And I think when we talk about equitable investments, it goes beyond government funds, it goes into other loans that can help communities and uplift communities.”
Osterman chairs the city council’s housing and real estate committee, which hosts Friday’s mortgage hearing. A formal invitation from Osterman’s office asked mortgage lenders to “designate a representative for the hearing who has regular oversight and knowledge of your lending processes and can initiate a substantive discussion on the subject.” But on Tuesday night, only one lender responded, the Chicago-based guaranteed rate.
“If the banks are really committed to racial equity as they say it, then they should be part of this conversation with us,” said Anthony Simpkins, president and CEO of Neighborhood Housing Services of Chicago, which helped organize the hearing.
Simpkins said recently loan commitments announced by the big banks “does not tackle the root causes of a system that has been developed over generations to intentionally prevent blacks and browns from accessing mortgages, the American dream.”
Among those expected to speak on Friday include City Treasurer Melissa Conyears-Ervin, State Treasurer Michael W. Frerichs, Chicago Housing Commissioner Marisa Novara, Congressman Jesus Garcia and Mike Quigley , as well as housing groups and loan equity advocates.
Late Tuesday afternoon, WBEZ contacted several of the invited banks seeking comment, but received no immediate response.
Cities have limited resources to hold banks accountable
During Monday’s hearing, a number of aldermen also questioned why small community banks did not have the option of becoming municipal custodians.
City comptroller Reshma Soni said her office had contacted 54 banks asking them to ask to keep the city’s deposits, but she said 0% federal interest rates mean “it It is not financially possible for many small banking institutions to become a municipal custodian at this stage. time.”
Soni acknowledged that “there is a feeling of prestige in being with the city and doing business with the city, and I think that’s where we need to push more” for greater equity.
Other cities have tried to sever ties with the big banks – for example, regarding support for fossil fuels – including Seattle, San Francisco, Los Angeles and New York.
It has proven difficult, said Horacio Mendez, president and CEO of the Woodstock Institute, which monitors loans in Chicago communities. Mendez, who also helped organize Friday’s hearing and is expected to speak, said cities have limited recourse to hold national banks to account.
And he said that “the sad fact” is that a handful of very large financial institutions are the only entities with the in-house sophistication and product suite “to actually meet the financial service needs of big cities.” So your hands are tied.
Mendez, who worked at the Federal Reserve Bank of San Francisco and later as a bank executive before becoming a lawyer, said banks view hearings like the ones going on at city council this week. “You know, probably the same way you see going to the dentist. “
“It’s just a necessary evil, no one really appreciates it,” Mendez continued. “You show up and you know you’re going to get fucked hard, and you just grit your teeth to try not to say anything that might bite your butt afterwards.” And then you walk away knowing that for the most part things aren’t going to change.
He said the biggest impact of such hearings was “to educate and inform”.
Linda Lutton covers Chicago neighborhoods for WBEZ. Am here @lindalutton.