King County council considers adding social responsibility as a criteria for choosing banks
The King County Council is considering legislation that will require its banking providers to show how they help the community through socially responsible banking.
King County contracts with banks for its many accounts, which total up to $250 million in a year.
The county hires banks for five-year contracts. If passed, the legislation would require banks to demonstrate that they are socially responsible by providing financial services to low-income populations and neighborhoods.
During the application process, the county would examine how much a bank invests in low-income communities, whether or not it provides grants or tax credit investments to affordable housing and whether or not it makes loans to small businesses located in low-income neighborhoods, among other requirements.
The ordinance would also require that banks receive a rating of “outstanding” in their most recent Community Reinvestment Act Review. The Community Reinvestment Act is a federal law that encourages commercial banks to meet the needs of the entire community, including low-income neighborhoods.
Several banks in Washington have an outstanding rating.
Councilmember Rod Dembowski sponsored the legislation, which was modeled after a similar law the Seattle City Council passed in August 2013. At a meeting of the King County Council’s Budget and Fiscal Management Committee Feb. 4 he said that the law is not as strict as the one in Seattle.
Councilmember Kathy Lambert questioned whether the laws would increase the cost of banking to the county. If banks are required to do more reporting, she reasoned, they would likely increase their cost to the county for services.
“There are several gotchas in here that are pretty extreme,” Lambert said. “If I were the banking institution, I would recommend that the fee go up considerably for that.”
Dembowski said that won’t happen.
“In drafting this legislation, we were very sensitive to the needs to not increase cost to the county,” he said. “We consulted with existing financial institutions and ran these proposals by them to make sure we were not getting to far afield.”
The committee did not act on the legislation on Feb. 4. The group will next discuss the proposal at 1:30 p.m. Feb. 19 at Council Chambers at 516 Third Avenue on the 10th Floor.