Dallas now requires banks for city tax dollars to report investment, lending deals
Dallas now requires banks seeking to do business with the city to disclose data on their lending and investment practices in underserved communities.
How much housing loans are given to low- and middle-income borrowers and residents of color, how much financial practices are offered in small business loans to minority- and women-owned businesses, all must be reported annually to the city by banks. Those who have or want to keep Dallas tax dollars.
The city council voted unanimously without discussion Wednesday to approve a “socially responsible banking ordinance” that city officials hope will lead to more equitable banking services for Dallas residents.
Dallas residents of color face systemic barriers and are affected by redlining and other discriminatory housing practices. An investigation conducted by the WFAA in 2020 and last year found that banks are largely blocking Black and Latino residents of Southern Dallas from obtaining mortgage loans or small business loans.
The new rules only apply to institutions seeking bank depository services with Dallas. Financial institutions are not controlled by the city.
Dallas currently contracts with Bank of America to hold more than $200 million in public funds and investments, and to pay on behalf of the city. City Council approved a payment of approximately $7.3 million to Bank of America in 2019 for depository and lockbox services. The current deal expires in December 2024.
Despite council approval on Wednesday, the city treasurer may waive the requirement, including a “compelling city need” and if no qualified bidders apply to provide services to the city. The Treasurer must first notify the City Council.
Although there are reporting requirements and some community education outreach mandates, nothing in the ordinance requires a financial institution to provide a specific level of lending or investment anywhere in the city or any neighborhood.
In addition to the other requirements set out in the rules, banks should:
To provide copies of their long-term plans to reinvest in under-served communities, ways to address credit disparities and any assessment of community banking needs.
- Report specific efforts made by them to invest in low and middle income areas and minority census areas.
- Support and participate in programs that educate borrowers about how they can prevent foreclosure or modify their loans, as well as reach residents of color, low-income neighborhoods and those in need. Support other community banking initiatives created for those who do little banking.
- Notify the city at least 30 days before the closure of any bank branch.
Cities such as DeSoto, Los Angeles, Seattle, Philadelphia, Boston and Minneapolis have similar responsible banking ordinances.
Council member Jaime Resendez, who helped lead the proposal along with council member Tenell Atkins, said the city has an advantage with Banks during a council meeting earlier this month because it is a way to return to the community. accumulating millions of dollars. He said the city has a right to know where banks are investing and issuing loans.
