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NYC deposits billions in big banks that lock out communities of color, report finds
By
David Brand
Published Dec 7, 2023
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By
David Brand
Published Dec 7, 2023
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New York City is depositing billions of dollars in banking behemoths that make a fraction of their mortgage loans in communities of color across the five boroughs, according to a new analysis released on Thursday.
The policy group New Economy Project examined federal mortgage data and found Bank of America, Citibank, JPMorgan Chase and Wells Fargo made about $11.3 billion in home loans in New York City’s neighborhoods of color compared to more than $45.5 billion in all other neighborhoods from 2018 to 2022. The policy group specifically compared home loans in New York City ZIP codes where Black, Latino and Asian residents make up at least 70% of the population to all other ZIP codes.
The city has long deposited most of its money in these “big four” banks, despite some efforts to combat lending discrimination. The report comes as an array of public officials — including city councilmembers, the state attorney general and the head of the federal Department of Housing and Urban Development — urge the city to use the billions it keeps in big banks to compel changes or create a publicly owned bank to loan in neighborhoods where major lenders rarely operate.
“I can guarantee you the city of New York has a whole lot of money in some banks,” HUD Secretary Marcia Fudge told affordable housing groups seeking financing in East New York last month. “We need to leverage those kinds of relationships.”
New York City holds its money in 28 approved banks selected by a commission that includes the mayor and comptroller. The average daily balance is around $12.4 billion, according to quarterly cash reports from the comptroller’s office
The city held about $554 million in JPMorgan Chase, $493 million in Bank of America and $304 million in Citibank on March 31 — about 77% of its total deposits, according to information obtained through a Freedom of Information Law request.
At the end of 2021, the city held about 86% of its total deposits in those three banks, according to records provided to the New Economy Project. Wells Fargo was not holding any city money at either time.
JPMorgan Chase spokesperson Brianna Curran said the bank is "committed to driving financial inclusion" and cited a $30 billion effort to issue home loans to applicants of color and finance affordable housing units.
Wells Fargo did not respond to emails seeking comment. Citibank and Bank of America declined to comment.
Ryan Lavis, an agency spokesperson, said the financial institutions that the city utilizes follow the required guidelines.
City leaders are aware of the lending disparities among the banks they use and have taken some actions to encourage fairer practices.
Mayor Eric Adams and Comptroller Brad Lander announced last year that the city would no longer open new accounts with Wells Fargo after a Bloomberg investigation revealed the company denied mortgage loans to Black applicants at double the rate of white customers.
An analysis by news organization The City found Wells Fargo denied more than half of loan and refinancing applications by Black New Yorkers in 2018 and 2019. The Banking Commission also required banks applying for city deposit approval to describe the concrete steps they have taken to stop discrimination.
The banking commission nevertheless voted to approve Wells Fargo as one of the city’s “designated” institutions again earlier this year, despite Lander's opposition.
Lavis said each designated bank “meets all the requirements for designation” under city rules, but the city is still not opening new accounts at Wells Fargo. The Banking Commission also voted to suspend new deposits at Capital One and KeyBank after they failed to show how they were stopping lending discrimination.
Will Spisak, a senior program associate with the New Economy Project, said his organization’s report shows Wells Fargo isn’t much of an outlier: None of the big banks are lending equitably in communities of color.
“The issue with Wells Fargo is a symptom of a bigger issue,” he said. “There's a really consistent pattern that we're seeing here.”
Spisak said the report builds on a review of statewide mortgage lending disparities issued by state Attorney General Letitia James’ office earlier this year. James’ analysis found white mortgage applicants were 33% more likely to be approved than similar applicants of color.
He said the data reveals the need for a public bank that would lend to local institutions, like credit unions, which would then distribute money in communities with an eye for equity and municipal needs, not shareholder profits. New York City cannot create a public bank without state legislation, which stalled despite majority support in the Senate last year.
In an interview with Gothamist last month, Fudge, the HUD secretary, said she also supports the concept of a public bank.
The report also highlights the dearth of bank branches in parts of the city where people of color make up most of the population, further restricting access to traditional lending institutions.
Speaker Adrienne Adams’ Council District 28 in southeastern Queens has just five bank branches — a rate of just 2.7 per 100,000 residents, the lowest in the city, according to the New Economy Project’s analysis of federal bank location data. People of color make up about 97% of the district's population, according to city planning data.
In contrast, Manhattan’s Council District 4 has 199 bank branches.
Adams’ spokesperson Rendy Desamours said she is weighing two bills that would require the Department of Finance to issue quarterly reports on city deposits and investments, and another that would establish a public banking task force.
“The city can and should be doing far more to ensure the banks that hold the city our money are facilitating homeownership opportunities, unleashing capital for small businesses and community development, contributing to narrowing the racial wealth gap and ensuring healthy communities,” he said.
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David Brand
David is a reporter covering housing for Gothamist and WNYC. Got a tip? Email [email protected] or Signal 908-310-3960.
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Gothamist is funded by sponsors and member donations
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