New York City - Since 2000, the number of bank branches in New York City increased by 213. But in the midst of this boom, New York City's low-income neighborhoods are being left behind. According to a report, released by Rep. Anthony Weiner (D-Brooklyn & Queens) today, over the last five years the 20 wealthiest neighborhoods in this City have gained 55 more banks; while only 3 additional banks stand in the poorest 20.
The number of bank branches in New York City has increased by 18.5% since 2000. This contrasts sharply with the previous five year period, from 1995-2000, when the number of banks actually fell by 11.5%. Unfortunately the boom has largely been concentrated in wealthy neighborhoods, leaving low-income New Yorkers without the benefits a financial institution can offer.
Access to banking institutions and their credit and investment capital is essential to create and retain jobs, develop affordable housing, and support small business. But banks in this city are disproportionately serving wealthy New Yorkers. For instance, while there is an additional bank for every 28,000 New Yorkers living in neighborhoods with a median household income above $30,000, there is only one new bank for every 85,000 people in neighborhoods with a median household income below $30,000.
Further over the last five years the number of banks in the Bronx, the borough with the lowest median income, only grew by 15. The number of bank branches in Manhattan increased by 101.
"Poor neighborhoods in this city are being squeezed out of the benefit a local bank can provide. We need better incentives and stronger regulatory authority to increase the presence of banks in the neighborhoods that need them most. Banks can't keep getting a free pass when they are not meeting standards set by Congress," Weiner said.
" A bank—where you can store your money to save for college, retirement or a home—is one of the tools that makes the American Dream possible," said New York City Councilman Eric Gioia. "We have a responsibility to ensure that every neighborhood has easy access to banking services. I thank Congressman Weiner for raising awareness on this issue, and I look forward to working with him in the future to ensure that every neighborhood that needs a bank gets a bank in our great City."
Highlights of the Weiner Study:
· In the last year, in neighborhoods where the median income is above $30,000, there are 184 more banks, whereas neighborhoods with a median income below $30,000, have only gained 28.
· In Brownsville, Brooklyn, which has a median income of just over $20,000 residents are served by only two banks, down from four in 1995. In, Murray Hill, Manhattan, with a median income of $66,000 there are 31 banks currently open, which is up from 27.
· Since 2000, over half of the net growth of banks occurred in Manhattan. In comparison the number of bank branches in the Bronx only increased by 7%. That means one new bank for every 66,633 Bronx residents, versus a new bank in Manhattan for every 9,489 people.
· In Brooklyn, the City's largest borough, the number of additional banks is almost three times fewer than in Manhattan.
Washington and Albany have both established programs meant to encourage banks to provide services in poorer neighborhoods - but they have proven to be insufficient.
The New York State Banking Department offers tax breaks, job training, and public fund deposits to banks that set up shop in underserved communities. And in 1977 Congress created the Community Reinvestment Act (CRA) to prohibit financial institutions from under-serving low-income areas and provide them with access to housing finance resources, consumer and business lending, community investments, and low-cost services.
Four federal agencies were selected to rate banks on their effort to serve the needs of low-income neighborhoods. But the regulators, representing the Federal Deposit Insurance Agency (FDIC), Office of Thrift Supervision (OTS), Office of Comptroller of the Currency (OCC), and The Federal Reserve (The Fed) are largely without authority and power to require banks to open branches in underserved areas.
For instance, in 1998 the four regulators rated over 98% of banks as either Outstanding or Satisfactory even though the banking industry continues to deny the mortgage loan applications of African Americans and Latinos twice as frequently as those of whites.
Weiner proposes to give CRA more authority to enforce change at financial institutions. Today, he pledged to introduce legislation designed to make the CRA grading scale reflect the reality of the situation and prohibit any bank found with a failing grade from opening a new branch anywhere.
