New York City officials have taken action against two leading banks, Capital One and KeyBank, after the financial institutions failed to submit their plans for combatting discrimination in their operations.
On Thursday, NYC Comptroller Brad Lander restricted account deposits at both banks due to their non-compliance with the city’s mandates issued earlier this year. The mandates require banks holding public funds to provide detailed strategies for addressing various forms of discrimination within their operations.
Lander’s office announced that Capital One and KeyBank had outright refused to comply with the anti-discrimination requirement. In a statement, Lander emphasized that banks seeking to conduct business with New York City must demonstrate responsible management of public funds and act responsibly within communities. He expressed disappointment that the five banks, including International Finance Bank, PNC Bank, and Wells Fargo, had failed to meet the city’s anti-discrimination policies, although the latter three banks currently do not hold city funds.
The recent measures will freeze new deposits at Capital One and KeyBank for up to two years. Capital One had held $7.2 million in city funds, while KeyBank held $10 million.
Criticism has emerged regarding New York City’s push for banks to comply with the environmental, social, and corporate governance (ESG) movement. Critics argue that ESG encourages businesses to utilize their financial influence to promote specific left-wing social objectives. Elon Musk, for example, has been vocal in his criticism of ESG, claiming that the “S” stands for “Satanic.” Meanwhile, Peter Schiff, a stockbroker and financial commentator, argues that banks only discriminate based on competence and creditworthiness to maximize profits.
ESG-related concerns also extend to policies introduced by Democratic officials, which consider personal loans independently of the debtor’s financial responsibility. The Federal Housing Finance Agency, led by Director Sandra Thompson under President Joe Biden’s administration, recently unveiled a policy that would result in higher mortgage rates and monthly fees for Americans with strong credit scores, while those with lower credit scores and smaller down payments would receive better rates. Republican state financial officers wrote to Biden and Thompson, criticizing the move for making home purchases significantly more expensive for families with strong credit, contradicting the longstanding principle of rewarding responsible financial behavior.
Furthermore, Treasury Secretary Janet Yellen launched an Advisory Committee on Racial Equity aimed at addressing racial disparities and advancing racial equity in the economy. The committee will focus on efforts to address acute disparities faced by communities of color.
The New York City Comptroller’s Office defended restricting the banks based on ESG and “racial equity” grounds.
“Consumer banks play a vital role in New York City’s communities, and their practices in lending, employment, and banking products and services reverberate through all five boroughs,” said Comptroller Lander. “In pursuit of a shared and prosperous economy for all, the city must be vigilant in evaluating the banks that hold its money and hear from New Yorkers about their experiences with these institutions. I am grateful to Mayor Adams and Commissioner Niblack for their partnership in this work, as we continue to take a hard look at who the city is choosing as banking partners.”
New York City Mayor Eric Adams also endorsed the plan to regulate banks the implement the Democratic Party’s political agenda.
“Financial institutions are critical pillars of our communities, and we must demand the highest standards from any bank that is entrusted with public funds,” said Mayor Adams. “These new steps will ensure the Banking Commission is designating only those banks that have shown that they can protect taxpayer money and that are committed to promoting equity in all aspects of their operations.”
Barika X. Williams, executive director, Association for Neighborhood and Housing Development endorsed the city’s Woke program.
“The ability to hold and profit from New Yorker’s hard-earned city deposits is a privilege, not a right,” said Williams. “We applaud the Banking Commission on taking this step to accept public comments and call on the city to incorporate the findings into their final determinations. We hope this is just a first step in deepening community engagement, scrutiny, and transparency in this public process. The city must demand more of banks seeking the privilege of holding New York City’s deposits and should not do business with banks that ignore, divest, exploit, or discriminate against communities of color.”
Andy Morrison, associate director, New Economy Project, accused the banks of ‘redlining’ consumers.
“We are pleased that the New York City Banking Commission will seek the public’s input on how best to ensure that banks holding city deposits meet the highest standards,” said Morrison. “Where the city deposits its billions of dollars is a fundamental matter of public policy, and we must demand that our public money is not held by banks that redline and otherwise harm New Yorkers and New York City neighborhoods.”
Thomas Sowell, an American economist, author, and senior fellow at the Hoover Institution, has criticized the simplistic notion that banks are discriminating against customers on the basis of race.
“In the year 2000, for example, data from the U.S. Commission on Civil Rights showed that 44.6 percent of black applicants were turned down for those mortgages, while only 22.3 percent of white applicants were turned down,” Sowell pointed out in a 2010 article. “These and similar statistics from other sources set off widespread denunciations of mortgage lenders, and demands that the government ‘do something’ to stop rampant racial discrimination in mortgage lending institutions.”
“The very same report by the U.S. Commission on Civil Rights, which showed that blacks were turned down for conventional mortgages at twice the rate for whites, contained other statistics showing that whites were turned down for those same mortgages at a rate nearly twice that for ‘Asian Americans and Native Hawaiians’.”
Thus, banks care about money more than they care about the race of their customers. This is yet another excuse for the radical left to take over America’s institutions and enlist them in the service of their political agenda.
In May, Florida governor Ron DeSantis signed into law a bill barring state officials from investing public money to promote ESG goals, and prohibited ESG bond sales.