Banks where City Hall and the Chicago Public Schools deposit taxpayer money would have to report more about their lending practices citywide under a proposed city ordinance to be considered this week.
The goal, City Treasurer Kurt A. Summers says, is to make sure the financial institutions are providing loans to small-business owners, entrepreneurs and affordable housing not-for-profits. Banks that fail to provide lending information in each of Chicago’s 77 neighborhoods or are found to be lagging in community involvement might see their share of city deposits decline if the ordinance passes.
Chicago has 18 “municipal depositories” — banks the City Council has authorized to hold cash for city government and CPS. Summers, whose office decides which of those banks City Hall uses, told the Chicago Sun-Times editorial board on Friday the ordinance would be a valuable decision-making tool for his staff.
“Being in the pool does not guarantee your receipt of a single deposit,” he said. ”Your performance across quality of product, fees … level of community investment and quality of partnership will have an impact on the allocation of city funds.”
The 18 banks on the city’s depository list include household names like Bank of America, Citibank and BMO Harris, as well as neighborhood banks like Albany Bank & Trust and Belmont Bank & Trust. Belmont’s chairman is James J. Banks, a zoning attorney and Illinois Tollway board member who is a nephew of former Ald. William Banks (36th). James Banks frequently lobbies City Hall on behalf of real estate developers seeking zoning changes.
The proposed ordinance would add three banks — Associated Bank, FirstMerit Bank and MB Financial — to the list, which hasn’t changed since 2010.
As of June 30, city government had more than $650 million in deposits, according to Summers. That amount and the number of banks City Hall uses can change daily, even eclipsing $1 billion at one point earlier this year.
As has been the case in other cities, the banking industry is concerned about the proposed changes introduced in the City Council by Mayor Rahm Emanuel and Ald. Thomas Tunney (44th).
Linda Koch, president and CEO of the Illinois Bankers Association, said in a prepared statement her trade group “appreciates opportunities to partner with Chicago leaders on efforts to increase investments in underserved communities.” But she added that “we currently have several concerns with the ordinance as drafted” and “we are working with stakeholders to address these concerns.”
The association declined to go into specifics.
Summers said other big cities, including New York, have faced lawsuits over similar reporting changes but, in Chicago, “we’ve learned from their mistakes.”
The City Council Finance Committee was set to consider the ordinance Monday but deferred discussion until Wednesday morning. The full council, which also meets later Wednesday, would take up the ordinance if the finance committee approves it.