DALLAS — Banks that want to get hired to take millions of dollars in deposits of taxpayer money from the city of Dallas will first have to show that they are responsible lenders in all parts of the city – rich and poor – if a proposed ordinance is passed later this month.
Members of the Dallas City Council’s Economic Development Committee on Monday were briefed on a concept called a responsible banking ordinance, which has been featured in WFAA’s ‘Banking Below 30’ stories on lending inequalities between the northern and southern parts of the city.
The idea got unanimous endorsement.
“I want to thank WFAA’s reporting, the Banking Below 30 investigation that, from my perspective, is kind of the genesis of this,” said Deputy Mayor Pro Tem Jaime Resendez. “That investigation shows that many banks choose not to make loans or do meaningful business in low-income parts of our city, even though federal law mandates that they act equitably and not discriminate.”
A responsible banking ordinance works because local governments have a lot of cash – taxes and fees from your pocket – to deposit. The ordinance would require banks to show that it serves all citizens throughout the city, from high to low-income, before it was hired as the city’s official “depository” institution.
“We do have leverage as a city,” Resendez said. “We do deposit millions of tax dollars in the bank. I believe we do have the right as customers to know what the bank that we use is doing, where they are investing, and where they are issuing loans.”
No local governments in North Texas have a policy like this. But 13 cities around the country do have some form of a responsible banking ordinance. Locally, DeSoto and Fort Worth both began studying how to get an ordinance passed after we featured the concept in our stories.
John Heasley, general counsel for the Texas Bankers Association, told the committee that his group has been consulting with the city on the ordinance language.
“I think there’s a fair amount of data that shows banks – FDIC-insured institutions in the City of Dallas, and Dallas County – are trying to do the right thing,” Heasley told WFAA after the briefing. “We’ve had conversations with our bankers in Dallas who would really like to get the word out about what they’re trying to do.”
Committee Chair Tennell Atkins, as well as Vice Chair Carolyn King Arnold and committee members Adam McGough, Omar Narvaez, Chad West and Gay Donnell Willis all said they supported the ordinance.
“I think this is absolutely the right move,” Willis said.
Arnold said even though the reporting requirements would only pertain to banks that seek to take city deposits, it would set a tone that policy makers were watching lending practices.
“We need to build a relationship with those banks that are going to be committed to all citizens, regardless of race, creed or color,” Arnold said.
Arnold also favors holding a public hearing so that people can share their difficulties getting loans from banks.
“We all know that these banking policies happen because of institutionalized racism,” Narvaez said. “This is a good thing for us, and we need to get it done.”
Atkins said that holding banks accountable is critical to growing the tax base south of Interstate 30.
“We’ve got to invest in the southern part of Dallas,” he said. “Our bankers are big institutions to help us to trigger economic development in the southern part of Dallas.”
The full council is expected to vote on the ordinance May 25.