The New York City Banking Commission on Thursday voted to approve 26 depository banks for two years, and to limit new deposits at Capital One (NYSE: COF) and KeyBank (NYSE: KEY). The vote came after the first-ever public hearing held by the Commission, at which community groups and advocates raised concerns about discrimination and predatory lending practices by the two banks.
“This is a victory for New Yorkers who have been fighting for more accountability from their banks,” said New York City Comptroller Brad Lander, one of three members of the Commission. “The Commission’s decision to limit new deposits at Capital One and KeyBank sends a clear message that we will not tolerate discrimination or predatory lending in our city.”
The Commission’s decision is based on the banks’ failure to submit required plans demonstrating their efforts to root out discrimination. Capital One and KeyBank were also found to have engaged in predatory lending practices, such as charging excessive fees and interest rates to low-income borrowers.
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Capital One, which at the end of April held $7.2 million in City deposits across 108 accounts, and KeyBank, which had $10 million in City deposits across three accounts, “outright refused to submit required policies,” according to a statement from the comptroller’s office.
The city will freeze new deposits into these accounts for up to two years. Lander also voted against designating three banks that do not currently hold any city deposits, 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 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.”
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