Responsible Banking Ordinances

Number of cities have either enacted or are considering enacting Responsible Banking ordinances.

These city ordinances would restrict municipal deposits to only those banks that provide detailed information on lending practices to low-income communities. If a city finds a bank (or possible even a credit unions) is not doing enough to provide credit to low-income residents, the financial institution could lose these municipal deposits and contracts for other services.

Raymond Natter at the law firm Barnett Sivon & Natter provides an interesting commentary about some of the public policy and legal issues that are raised by these local ordinances.

He notes that these city ordinances may be at cross purposes with the goal of the Dodd Frank Act to discourage risky lending.

Read Natter's article.