Responsible Banking Moves Forward!

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Tuesday October 1, 2013 was a very big day for Minneapolis, Hennepin County, and responsible banking! For years, Jewish Community Action and the Northside Community Reinvestment Coalition have asked for greater transparency and accountability in how the City and County deposit taxpayers' dollars, and yesterday, we saw tremendous progress on both fronts: the Hennepin County Board of Commissioners authorized contract negotiations for their banking relationships for the next five years, and the Minneapolis City Council Ways and Means Committee passed a Responsible Banking Ordinance that will next head to the full City Council for a vote! Thank you to the JCA members and allies who joined us for yesterday's important hearings, and special thanks to JCA Board Chair Andrea Rubenstein for her thoughtful testimony at the City Council Ways and Means Committee public hearing. For more information on JCA's financial justice work, and the significance of yesterday's developments, please read Andrea's eloquent testimony below:

 

Good afternoon, Madame Chair and Members of the Committee:

My name is Andrea Rubenstein. I am here today both as a resident of Minneapolis and as board chair of Jewish Community Action. JCA has been working for several years in partnership with the Northside Community Reinvestment Coalition, the Urban League, and other community groups beginning on the Northside and also moving to other neighborhoods to fight housing loss through foreclosure. We are thrilled and grateful to Council Member Glidden, as well as Council Members Quincy and Johnson, and your staff, for moving this ordinance forward. We believe that it is both a symbolic and a practical victory for the people and for neighborhood preservation because it will provide an effective tool in our continuing efforts to respond effectively to the foreclosure crisis.

Jewish Community Action has worked in a multi-racial, multi-class and multi-faith coalition for more than six years to respond to the foreclosure crisis in Minnesota, a crisis that has hurt north Minneapolis, as well as many other communities. So many north Minneapolis families have been displaced, seriously hurting the assets of individual families, their blocks and the entire city. My personal experience in working on redistricting also showed me the dramatic losses in population because of the housing losses on the Northside. Through our work at JCA, we have seen, too, that no community has been more seriously harmed than the African American community, only leading to a more significant disparity in homeownership in Minneapolis.

JCA is also part of a national movement led by the National Community Reinvestment Coalition to pass local ordinances across the country. Minneapolis will be the 10th city to adopt a responsible banking ordinance. Cleveland was first in 1991, and Boston is the most recent, this past year.

Responsible banking is designed to require banks that receive deposits from the City of Minneapolis to submit data to the city on how the bank is providing various services to city residents. As the City Attorney just noted, included in these data is information about the number of homeowner loans originated, the number of foreclosures, the number of loan modifications, the number of small business loans, the number of branches and other important information that will inform the city council and the public about how well the bank is serving the community.

A reinvestment plan, to be submitted every two years by the financial intuitions that want to do business with our tax dollars will be a key tool for accountability.

We endorse, strongly support and greatly appreciate the amendment to the purpose statement in the ordinance, which has added the following key language:

To promote the long term economic well-being of the City of Minneapolis and its residents and to ensure economic growth by encouraging fair lending practices and equitable provision of banking services throughout the city.

This purpose clearly defines what the city council and the public expect from banks in order to advance the economic well-being of the city. It says that foreclosures and access to credit affect the economic well-being of all residents of Minneapolis and banks must do all that they can to increase access to fair and equitable services.

JCA and NCRC began our work in foreclosure prevention by examining real estate records in Hennepin County and identifying those residences that might be facing a crisis because of the nature of their mortgages, such as adjustable rate mortgages with balloon payments about to come due. We undertook to talk to people house by house, door knocking and distributing literature and information about where to find services to help them and to tell them what their rights are. We intervened when possible by contacting mortgage companies and banks directly to advocate for loan modifications and made numerous attempts to seek agreements with those banks and companies on fair lending and fair foreclosure processes, often to no avail. We were able to save a number of homes on a case by case basis but were stymied from any systemic solutions. This ordinance will make a big difference! Meanwhile, the door knocking alone has brought the community together; many who answered their doors and found needed help are now the persons doing the door knocking!

The door knocking has increased the public’s understanding of this problem and how residents have become involved in this issue, including what the problem of foreclosures has done to families and how with organizing and advocacy, families have been able to stay in their homes.

This involvement demonstrates that community residents are interested in the work of banks and would be willing to participate in evaluating the data of these services. While the ordinance’s public purpose states the importance of sharing this data, there is no clear language about public input or recommendations about which banks are providing the best service in the city. We recommend that the ordinance language on public disclosure, public comment periods and other approaches for the public to participate in the process should be clarified and strengthened as the data collection and analysis evolves. (I.e., we suggest that a Community Review board could look at the data and/or a 60 day public comment period.)

Members of NCRC, JCA and our allies look forward to working with the City Council and city staff to review this data as it comes in and to work with banks to improve services and financial equity in the city. Thanks again to the City Council for taking this important first step to improve economic growth and fair lending in Minneapolis.

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