by Todd Feurer, CBS Chicago web producer
CHICAGO (CBS) — Banks where the city of Chicago keeps its municipal accounts would be required to disclose more information about who they provide home loans to, in an effort by aldermen to address longtime racial disparities in who is approved for mortgages.READ MORE: 5 Killed, 39 Wounded In Weekend Shootings Across Chicago
If banks want to remain as or be chosen to serve as Chicago’s municipal depositories, they would be required to provide demographic information on who they lend to, who they hire, and why loans have been denied, under an ordinance unanimously approved Monday by the City Council Finance Committee.
Aldermen also would be required to hold an annual public hearing to discuss the information provided by banks before approving each year’s list of municipal depositories.
Ald. Harry Osterman (48th), who chairs the Housing Committee and is the chief sponsor of the ordinance, said the new requirements were prompted by a WBEZ Public Radio report last year which revealed vast disparities between loans provided in White communities in Chicago, and those in Black and Brown communities on the South and West sides.
“For every dollar banks loan in Chicago’s White neighborhoods, they invested 12 cents in Chicago’s Black neighborhoods, and 13 cents in Latino areas; and that racial disparity home ownership gaps are worse today than in 1960,” Osterman said.READ MORE: Man Shot, Critically Wounded In Car Downtown
Osterman said banks are already required to provide the same information to federal regulators, so disclosing it to the city would not create an undue burden for financial institutions seeking to hold hundreds of millions of dollars in city funds.
He said the new disclosure requirements are aimed at helping address disparities in home lending practices in Chicago by arming aldermen with information on how banks are performing before the City Council chooses whether to do business with those financial institutions.
“We’re not in the business to regulate banks, but it is our business to ensure that we are the stewards of the interests of the residents that we represent in the city of Chicago,” Osterman said.
Anthony Simpkins, president and CEO of Neighborhood Housing Services, said only 30% of Black families and 40% of Latino families in Chicago own their homes, compared to 55% of White families. He said Black applicants are denied mortgages at a rate three times higher than White applicants nationwide, even when controlling for financial factors such as income and credit score.
“Access to an affordable home mortgage is essential to achieving the dream of home ownership, but for generations that dream has been out of the reach for millions of families of color,” Simpkins said.MORE NEWS: One Person Rushed To Hospital After Multi-Vehicle Crash On Edens Expressway
City Comptroller Reshma Soni told aldermen, if the ordinance is approved by the full City Council on Tuesday, she hopes to implement the new disclosure requirements in time for the selection of next year’s municipal depositories as part of the annual budget process, although she acknowledged ther might be some “growing pains” that could delay implementation.