On Thursday, the Banking Commission of New York City fined Capital One and KeyBank for failing to submit anti-discrimination policies.
Brad Lander, the NYC Comptroller, said that the commission voted to “freeze NYC’s deposits” at the two banks.
Given the current state of the banking sector, and the default of many banks, the headline is a bit scary, but this is a culture problem, not a solvency one. The bank’s compliance with a New York City ordinance requiring anti-discrimination policies to be filed is the reason for the freeze.
Because of the commission’s decision, Capital One and KeyBank will no longer receive municipal funding. For the same reason, the city council voted against designating International Finance Bank, PNC Bank, and Wells Fargo as authorized depository financial institutions.
Lander said that banks wanting to do business with New York City must show they will act responsibly with public funds.
The announcement claims that Capital One had $7.2 million in New York City funds as of the end of April, and KeyBank, which held $10 million, refused to submit to the required policy.
The banks will get no new deposits for the next two years as punishment.
They failed to show they weren’t discriminatory in hiring, lending decisions, branch openings and closings, and other operation.
Annie Levers, New York City’s Deputy Comptroller for Policy, said that people worry that their taxes are going to banks that, among other things, subsidize gun manufacturing and fossil fuels.
According to the announcement, part of the public feedback included the experiences of Muslims who allege they were discriminated against. Some renters say the lending practices of some banks jeopardize their right to safe living conditions.
Climate advocates condemn banks that continue to lend billions for fossil-fuel expansion.
The NYC Comptroller is punishing banks for not sharing their political views. That sounds discriminatory.
Is this constitutional?