Asbury Park Press

Banks Should Reinvest In Their Communities

Asbury Park Press — Friday, November 20, 2015

BY PHYLLIS SALOWE-KAYE

Essex County recently passed legislation that requires banks and financial institutions receiving deposits of county funds to provide information regarding their community reinvestment activities.

This paves the way for responsible lending to increase in Essex County, a victory for the entire community.

Since the Community Reinvestment Act was in enacted by Congress in 1977 to encourage depository institutions to help meet the credit needs of low- and moderate-income neighborhoods, the financial landscape has dramatically changed and further protections are warranted today.

Absent statewide legislation that further deters bad actors or encourages stronger consumer protections, the local legislative approach taken by Essex County, in collaboration with advocacy groups such as New Jersey Citizen Action, presents a model for communities throughout New Jersey to protect their neighborhoods and taxpayer dollars.

Why do municipalities and counties throughout New Jersey need to take this up as a cause? Take the case of Hudson City Bank, with branches throughout New Jersey: It recently agreed to pay $33 million to settle civil charges in a case of redlining, a practice where an establishment refuses a loan or insurance to someone because they live in an area deemed to be a poor financial risk. Essex County can now more readily identify institutions with bad lending records and prevent billions of dollars of deposits and taxpayer monies from being invested in such banks.

Can you say the same for your community?

Legislation at the county and municipal levels is a viable option to encourage community reinvestment, and New Jersey Citizen Action stands ready to provide technical guidance and support to communities that want to follow in the footsteps of Essex County, to ensure financial institutions practice responsible lending and reinvestment in their communities.

For more than 30 years, New Jersey Citizen Action has been a leader in New Jersey, working with banks to ensure they comply with the Act. NJCA has negotiated agreements with more than 30 institutions, resulting in commitments of $40 billion in below-market rate mortgages, discounted home improvement loans, construction and permanent financing for nonprofit affordable housing developers, and small business loans for women and minority- owned businesses.

The practices and products that are developed by banks and financial institutions have a measurable effect on the tax base, the quality of life and the overall economic viability and competitiveness in our neighborhoods. There is an obligation that depositories commit to fair and non-predatory practices when making loans and providing services. There are only gains to be made by following Essex County's lead and introducing local legislation.

New Jersey Citizen Action applauds Essex County for setting the bar in New Jersey to ensure banks reinvest into communities where they operate. So who's next? Now it's up to others to step up to the plate, too.

Phyllis Salowe-Kaye is Executive Director of New Jersey Citizen Action.

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