NEW YORK - If New York's chief financial watchdog gets his way, the City would use its hefty clout to end bank redlining, which deprives poor and minority communities of effective banking services.
John Liu, now in his first year as city comptroller, has complained about the illegal practice of redlining which he accused some unnamed banks of perpetrating at the expense of the city's low-income, Black and Hispanic neighborhoods. "There are some neighborhoods that don't have a significant presence of bank branches," he said. "That's something we would like to see changed in the City, more banks opening up. There are laws against redlining but we still see whole communities that don't have significant bank branches, and so people have to rely on check-cashers and so-called financial institutions that bilk people out of large amounts of their money. There are several changes we would like to see banks undertake that are more consumer and residential friendly. We will use our leverage in various ways as an investor, as a client, as a customer of these banks" to change things.
Liu, the first Asian American elected to city-wide office said that that the City had considerable clout over the banks that could be used to help force substantial reforms but cautioned that City Hall, in general, and his office, in particular, didn't have full control. "We have a number of ways to have an impact on financial institutions. The most intuitive way is that we are generally significant shareholders in every one of these banks. So as investors, we can make certain demands for change," he argued. "We are also a client of these banks. They sell bonds for us and they make significant profit by selling our bonds. They hold our cash, our funds and so we are significant clients and customers of these banks. That's another way of expressing our interest.
"We do have leverage over these banks but we don't have an unlimited amount of leverage and I intend to use as much as possible to enact the right kind of change."
Another reform he wants is in the policy towards foreclosures, especially those affecting low-income property owners.
He recently joined community, church and labor leaders in a broad call on banks to renegotiate more mortgages, a move that would ease repayment terms and allow people to remain in their homes.
