Support is built to improve loans in minority neighborhoods


In response to WFAA reports, some elected officials are exploring how local government can hold banks accountable to guarantee fair loans.

DALLAS – Banks lend relatively little money to the largely minority population who live under Interstate 30 in Dallas. Now support is building for a solution that could help change that. This is called a responsible banking order.

You might not realize it, but local governments keep your taxes in banks – the same banks we all use. A responsible banking ordinance requires local government to assess how well a bank serves all of its citizens, from high incomes to low incomes, before choosing to do business with the bank.

The concept was developed in part by the National Community Reinvestment Coalition, which advocates greater reinvestment by banks in low- to moderate-income neighborhoods. The coalition has drafted model legislation that local governments can work on.

Jaime Resendez, a member of the Dallas City Council, learned of the potential of such an ordinance from a WFAA report, and now he says he supports its passage. It represents the Pleasant Grove area, under Interstate 30.

“I can’t imagine much opposition, if any, at the council level,” Resendez said. “I am very interested in moving forward and exploring the possibility of a responsible banking order. It is long overdue here in the city of Dallas.”

Resendez said he is working on the details with the Dallas city manager and the city attorney.

“The City of Dallas supports responsible banking practices that ensure investments are made in all areas of the city, and we look forward to stepping up our work with our banks to achieve these goals,” said Elizabeth Reich, city chief financial officer. , in a statement to WFAA. “We are considering whether to pursue an order and are looking into all related issues.”

No local government in North Texas has a policy like this. But 13 cities across the country have some form of responsible banking ordinance, including Cleveland, Minneapolis, Los Angeles, Kansas City and Pittsburgh. In theory, the idea works because local governments are good bank customers, which gives them leverage.

Earlier this year, we asked some local government entities which banks they were using and how much they had on deposit at the end of February. The total came to $ 917 million in taxpayer dollars.

  • Dallas uses Bank of America, with $ 257 million on deposit.
  • Dallas County also uses Bank of America, at $ 215 million.
  • Dallas ISD has deposited $ 39 million with Wells Fargo.
  • Parkland Hospital District has $ 6.7 million with JPMorgan Chase, $ 28 million with Regions Bank and $ 371 million with BNY Mellon.

Dallas County Judge Clay Jenkins also supports a responsible banking order. According to him, depending on the time of year, bank deposits greatly exceed $ 1 billion.

“I’ve talked to some people with Goldman Sachs, and they’ve confirmed that a billion dollars will get people’s attention,” Jenkins said.

Banks are required to submit loan data showing how much they lend and the neighborhoods they lend to, as well as a reinvestment plan setting targets for future lending. Local governments create an oversight body to assess banks, publish results, and hold community hearings.

Jenkins is in the process of organizing leaders from the county, city, Parkland, Dallas College District, and DISD to work on a solution.

“The important thing is that the banks know that there are certain measures that a large group of tax authorities are studying,” he said. “And these measures are about more loans to people of color, to small businesses south of 30, to groups. That have been left out of the process. I think that’s going to have a good effect.”

It had a good effect in Philadelphia, which passed its ordinance over two decades ago. Philadelphia combines several factors to rank banks based on the quality of mortgage and commercial loan distribution in low-income areas.

Between 2008 and 2018, Philadelphia banks chose to make deposits with more active lenders, increasing their share of business loans by 18% in low-income census tracts.

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