St. Paul city leaders want to partner with banks to combat racial disparities and started accepting proposals Wednesday from companies who want to handle the city’s banking needs for the next several years.
City Council members want to select a company that is committed to racial equity and gives everyone an opportunity to obtain affordable housing and financial services. They voted Wednesday to create a Responsible Banking Committee that will evaluate proposals and recommend a bank to the city’s chief financial officer.
U.S. Bank now handles the city’s general banking needs and wants to continue to do so. Their contract with the city expires this year.
“U.S. Bank will participate in the [request for proposals] and we are proud to have been the city of St. Paul’s bank since 1985,” spokesman Dana Ripley said.
Council Member Dai Thao co-sponsored the plan to create a Responsible Banking Committee. He noted a local study had found racial disparities in banks’ lending practices. A professor at the University of Minnesota’s Humphrey School of Public Affairs evaluated mortgage and small business lending, loan denials and customer service. His study gave U.S. Bank a “D” and awarded low grades to many large banks in the Twin Cities.
“If any bank wants to do business with the city … I think they can do more and I think we can strengthen that partnership,” Thao said.
Ripley declined to comment on Samuel Myers’ study.
Vic Rosenthal, executive director at Jewish Community Action, helped prompt the study. He said St. Paul’s new committee is an incremental but important step to resolve issues highlighted in the report.
“Cities only have so many resources,” he said. “This is an idea to say to banks, ‘Let’s be creative together.’ Because if we want to resolve some of the broader questions confronting our city we need all the help we can get.”
In 2014, St. Paul began requiring banks that want to do business with the city to submit a “Community Presence and Responsibility in Banking Questionnaire.” And the company that has the general banking contract had to start submitting annual reports on their lending and philanthropic work.
The new committee, which will include representatives from neighborhoods and community organizations, will review the questionnaires. Committee members will discuss additional questions the city should be asking and work with city staff to monitor the annual reports.
St. Paul’s additional scrutiny of banks comes a couple of months after Minneapolis City Council members proposed ending relationships with banks that invest in the fossil fuel industry and projects like the Dakota Access pipeline. They asked staff to report back by July on how the city could end those relationships.
A few years ago, Minneapolis started requiring that financial institutions working with the city give more information on lending practices. Minneapolis has not pursued a Responsible Banking Committee.