New York City Banking Commission Votes to Freeze NYC’s Deposits at Capital One and KeyBank
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Following the first-ever public hearing held by the New York City Banking Commission today, all three members voted to freeze deposits at Capital One (NYSE: COF) and KeyBank (NYSE: KEY) after the banks failed to submit required plans demonstrating their efforts to root out discrimination. New York City Comptroller Brad Lander, one of three members of the Commission, also voted against designating three other banks to hold public funds: International Finance Bank, PNC Bank, and Wells Fargo.
“Banks seeking to do business with New York City must demonstrate that they will be responsible managers of public funds and responsible actors in our communities,” said Comptroller Brad Lander. “Unfortunately, despite several opportunities to do so, five banks failed to comply with the New York City Banking Commission’s designation process – leaving us to conclude that they are not taking meaningful actions to combat discrimination in their operations and are not responsible stewards of public dollars. I’m grateful to the Mayor, Finance Commissioner Niblack, Treasurer Jackman, Banking Commission Member Jenerette, and our partners at the Department of Finance for working with us to strengthen oversight over the banks that profit from public funds.”
This year marked the first of the NYC Banking Commission’s biennial votes on depository banks since Comptroller Lander and Mayor Adams took office. At the urging of the Comptroller’s Office, the Banking Commission instituted additional soundness criteria to evaluate bank financials, including assessing unrealized losses, uninsured deposits, and capitalization ratios of banks seeking to hold funds on behalf of city agencies. All of the applicants passed the soundness review.
Under the Charter and the Rules of the NYC Banking Commission, to comply with designation requirements a bank must file certificates concerning its policies of non-discrimination in hiring, promotion, and delivery of banking services, and for bank closings. In February, the Commission announced banks must submit to demonstrate a meaningful commitment to combat discrimination in employment, services, and lending. This year, the Commission thoroughly reviewed those materials, bringing questions and concerns about any deficiencies to the attention of the banks with requests for follow up information. Five banks failed to comply with the designation process and the Comptroller voted against allowing them to receive additional deposits this cycle.
Capital One, which held $7.2 million in City deposits at the end of April across 108 accounts, and KeyBank, which held $10 million in City deposits at the end of April across three accounts, outright refused to submit required policies. Representatives for Mayor Adams and Department of Finance Commissioner Preston Niblack joined the Comptroller in voting to freeze new deposits in Capital One and KeyBank for up to two years. Comptroller Lander also voted against designating three banks that do not currently hold any City deposits, International Finance Bank, PNC Bank, and Wells Fargo, after they failed to demonstrate they were taking action to prevent discrimination in branch openings and closings, lending decisions, hiring, and other operations.
At the public hearing, the Banking Commission heard testimony from Muslim New Yorkers who have experienced discrimination in the process of opening or closing accounts. Tenants expressed concerns about predatory lending practices by banks that jeopardize their rights and safe living conditions. Climate advocates condemned banks that have continued to lend billions of dollars for fossil-fuel expansion, despite having made net-zero commitments. Members of the public also spoke in favor of creating a public bank that could provide banking services for City deposits and deploy that capital to better serve New York communities.
Deputy Comptroller for Policy Annie Levers, who represents the Comptroller on the Banking Commission, spoke to the concerns raised by New Yorkers before casting votes against the banks that did not meet the documentary requirements to demonstrate their efforts to combat discrimination.
“The perspectives we heard today from New Yorkers who experienced discrimination in the process of opening or closing accounts, and frontline bank staff who faced illegal and abusive practices, should give all of us pause. We heard from many residents concerned that taxpayer dollars are going to banks that provide financing for predatory lending, fossil fuel extraction, and gun manufacturing – and support for the idea of a public bank that would instead put those dollars to work for our communities. The Banking Commission can and should assume a stronger role in assuring that the city only conducts business with banks who demonstrate their commitment to community reinvestment and fair credit practices,” said Deputy Comptroller for Policy Annie Levers.
Twenty-six banks were certified to receive deposits from New York City agencies for the next two years, 23 unanimously. Capital One and KeyBank will be able to service existing contracts for one year. Deposits at Signature Bank, now owned by Flagstar, will be conditionally extended for an additional year under the new ownership. The full list of banks is available here.
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