Chicago City Council Chambers (wikimedia pic)

We think it would be worth exploring the creation of a program where a city agency that’s not involved in the procurement process itself, or one or more non-profits under contract with the City, could provide technical assistance to banks that are interested but hesitant to apply. Banks and non-profits provided similar types of services to small businesses under the federal Paycheck Protection Program.

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My name is Horacio Mendez and I’m the President and CEO of Woodstock Institute. I’d like to start by commending the City Council on multiple fronts. The first are its attempts to increase the number of smaller financial institutions that the City can support through the municipal depository process. The second is to ensure that the City does business with depository institutions that align with its values through the introduction and passage of the Lending Equity Ordinance.

As it relates to the municipal depository process, and speaking from experience, applying can be complex and time consuming … and this was true before the Lending Equity Ordinance. At a $15 billion US subsidiary of a global bank, we discussed the costs and benefits of applying to be a municipal depository, and the combination of having to set up new data collection and reporting processes in order to have a marginally profitable relationship wasn’t sufficient to justify the process. At a much larger global institution, it was a no-brainer – we had the systems and people in place to handle any and all forms of requests, including responsible banking ordinances like the LEO, with the hope that it would increase our chances of doing big deals for big cities.

Being on the other side of the fence now, we think it would be worth exploring the creation of a program where a city agency that’s not involved in the procurement process itself, or one or more non-profits under contract with the City, could provide technical assistance to banks that are interested but hesitant to apply. Banks and non-profits provided similar types of services to small businesses under the federal Paycheck Protection Program.

As to our general expectations regarding the performance of depository institutions doing business with the City, I want to try something different that is often uncharacteristic of Woodstock Institute when it comes to discussions about banks. I’m going to be nice.

Now … before I’m nice and freak everybody out, I’d like to set some context:

  • The excellent work by WBEZ and City Bureau showed us that banks need to work harder to find ways to originate more mortgage loans in the low- and moderate-income and minority communities of Chicago.
  • We’re proud of the steps taken at the State level with the passage of the IL Community Reinvestment Act and the Predatory Loan Prevention Act, and the steps you’ve taken at the City with your Lending Equity Ordinance, that aim to close that gap.

With the current data we get from the Federal Government and what we’ll be getting as a result of the LEO, we’ll be able to work with you to identify the metrics for lending activity in the city that you find the most useful. If you tell us the metrics you want, we can provide the analysis and rank the institutions accordingly.

With that said … we came up with our own assessment and rankings that include both home mortgage lending and small business lending to paint a pretty good picture of who is doing an above average job in helping our economy thrive…. (testimony continues with slides, download for full testimony)