The District of Columbia has a banking problem. Concerned DC residents, elected officials, organizations, churches, and others have experienced a dearth of sound financial services and branch locations in various communities, a vacuum of community lending staff at most large financial institutions, and the inability of credit worthy, lower-income borrowers to obtain mortgages. In addition to these on-the-ground experiences, a recent report by the National Community Reinvestment Coalition (NCRC) shows that all lenders as a group:
- made a disproportionately low percentage of home loans to African-Americans, low- and moderate-income (LMI) borrowers and female borrowers
- denied African-American, Hispanic and LMI borrowers roughly 2 times more than their white and middle- and upper-income peers
- have much fewer bank branches in LMI and minority communities
As a way to address these pressing banking issues, Councilmember Jack Evans introduced the Community Development Amendment Act of 2013 (for more detailed info on bill as introduced, click here). This important legislation would require banks who want to hold any portion of the District government’s $2 billion in deposits to submit and report on plans to serve all credit-worthy borrowers and communities in DC. Similar Responsible Bankings Ordinances have passed in other jurisdictions across the United States, a grassroots movement for greater financial accountability and a more equitable distribution of financial services.
“Subprime lenders are gone and what we need are lenders making good loans to return to the community. Low-income borrowers, with fixed-rate loans did very well during the housing crisis. Lenders doing business with the DC government need to step in and do business with these credit-worthy residents. We need good money to keep the bad money from coming back.” Frank Demarais, Vice President and General Manager, Manna Mortgage.
This piece of legislation was unanimously voted through by the DC City Council on December 2. We will be working with the appropriate government agencies to prepare implementation as well as other ways to get more banks involved in meeting financial and credit needs of DC residents and neighborhoods. Stay posted!
The Community Groups supporting this effort include, but are not limited to:
Urban Housing Alliance
Ward 8 Workforce Development Council
Washington East Development Alliance