Dallas now requires banks seeking to do business with the city to disclose data on their lending and investment practices in underserved communities.
Financial practices from how many residential loans are given to low- and moderate-income borrowers and residents of color, to how much in small-business loans are given to minority- and women-owned businesses, will all have to be reported yearly to the city by banks that keep or want to hold Dallas tax dollars.
The City Council unanimously voted Wednesday without any discussion to approve the “socially responsible banking ordinance,” which city officials hope will lead to promoting more equitable banking services for Dallas residents.
Dallas residents of color face systemic barriers and lingering impacts from redlining and other discriminatory housing practices. An investigation by WFAA found in 2020 and last year that banks have been keeping largely Black and Latino southern Dallas residents from getting mortgage loans or small-business loans.
The new rules apply only to institutions seeking bank depository services with Dallas. Financial institutions aren’t regulated by the city.
Dallas currently contracts with Bank of America to hold more than $200 million in public money and investments and to make payments on behalf of the city. The City Council approved paying Bank of America around $7.3 million for depository and lockbox services in 2019. The current deal expires in December 2024.
Despite the council’s approval Wednesday, the city’s treasurer could waive the requirement, including if there’s a “compelling city need” and if no qualified bidders apply to provide the city with services. The treasurer would have to notify the City Council in advance.
Though there are reporting requirements and some community education outreach mandates, there is nothing in the ordinance that requires a financial institution to provide a specific level of lending or investment anywhere in the city or to any neighborhoods.
Also among other requirements laid out in the rules, the banks must:
Provide copies of their long-term plans to reinvest in underserved communities, ways to address lending disparities and any assessments of community banking needs.
- Report specific efforts they’ve made to invest in low- and moderate-income areas and minority census tracts.
- Support and take part in programs that educate loan borrowers on how they can prevent foreclosure or modify their loans, as well as support other community banking initiatives created to reach residents of color, low-income neighborhoods and people who do little to no banking.
- Notify the city of any bank branch closures at least 30 days before they’re shut down.
Cities such as DeSoto, Los Angeles, Seattle, Philadelphia, Boston and Minneapolis have similar responsible banking ordinances.
Council member Jaime Resendez, who helped spearhead the proposal with council member Tennell Atkins, said during a council meeting earlier this month the city has leverage with banks since it is depositing millions of dollars meant to go back into the community. He said the city has the right to know where banks are investing and where they’re issuing loans.