The New York City (NYC) Banking Commission is freezing new bank deposits at Capital One (NYSE:COF) and KeyBank.
Following the first-ever public hearing held by the New York City Banking Commission on Thursday, all three members voted to freeze deposits at Capital One and KeyBank after the banks failed to submit required plans demonstrating their efforts to root out discrimination.
JPMorgan had a similar occurrence when the bank began to freeze customer bank accounts in its latest scandal.
Republican attorneys general from 19 states say the bank is “persistently” discriminating against its own clients and closing bank accounts without warning.
However, Capital One’s story is a little different.
New York City Comptroller Brad Lander, one of three members of the Commission, also voted against designating three other banks to hold public funds: International Finance Bank, PNC Bank, and Wells Fargo, per New York City’s Comptroller press release.
“Banks seeking to do business with New York City must demonstrate that they will be responsible managers of public funds and responsible actors in our communities,” said Comptroller Brad Lander.
“Unfortunately, despite several opportunities to do so, five banks failed to comply with the New York City Banking Commission’s designation process – leaving us to conclude that they are not taking meaningful actions to combat discrimination in their operations and are not responsible stewards of public dollars.
I’m grateful to the Mayor, Finance Commissioner Niblack, Treasurer Jackman, Banking Commission Member Jenerette, and our partners at the Department of Finance for working with us to strengthen oversight over the banks that profit from public funds.”
Capital One Banking News and Updates Today
Capital One, which held $7.2 million in City deposits at the end of April across 108 accounts, and KeyBank, which held $10 million in City deposits at the end of April across three accounts, outright refused to submit required policies.
Representatives for Mayor Adams and Department of Finance Commissioner Preston Niblack joined the Comptroller in voting to freeze new deposits in Capital One and KeyBank for up to two years.
Comptroller Lander also voted against designating three banks that do not currently hold any City deposits, International Finance Bank, PNC Bank, and Wells Fargo, after they failed to demonstrate they were taking action to prevent discrimination in branch openings and closings, lending decisions, hiring, and other operations.
“The perspectives we heard today from New Yorkers who experienced discrimination in the process of opening or closing accounts, and frontline bank staff who faced illegal and abusive practices, should give all of us pause.
We heard from many residents concerned that taxpayer dollars are going to banks that provide financing for predatory lending, fossil fuel extraction, and gun manufacturing – and support for the idea of a public bank that would instead put those dollars to work for our communities.
The Banking Commission can and should assume a stronger role in assuring that the city only conducts business with banks who demonstrate their commitment to community reinvestment and fair credit practices,” said Deputy Comptroller for Policy Annie Levers.
Twenty-six banks were certified to receive deposits from New York City agencies for the next two years, 23 unanimously. Capital One and KeyBank will be able to service existing contracts for one year.
Deposits at Signature Bank, now owned by Flagstar, will be conditionally extended for an additional year under the new ownership.
Other Bank News Happening Today
The latest 1,000 bank employee layoff by JPMorgan (NYSE:JPM) is creating panic in the banking industry.
About 1,000 First Republic (OTCMKTS:FRCB) employees have lost their job across all of First Republic’s businesses, per Financial Times.
This equates to about 15% of its roughly 7,000 employees, people familiar with the matter said on Thursday.
“The cuts are a further blow to First Republic employees, who have already had a challenging two months.
Following the collapse of Silicon Valley Bank and Signature Bank in March, customers of First Republic withdrew tens of billions of dollars of deposits and the lender was ultimately shuttered by US regulators and sold over a weekend to JPMorgan,” said FT.
Within the next 30 days, JP Morgan will notify First Republic employees of their job status, and not everyone will be offered a position with the bank.
For those who are offered a job, they may be given either a permanent role or limited-term employment ranging from three to 12 months.
Since the takeover, First Republic employees have been left in the dark about their future with the company.
Morgan Stanley announced 3,000 job roles will be cut in second round of layoffs earlier this month.
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