Law requires banks seeking business with King County show they are ‘socially responsible’
Banks doing business with King County now must show how they help the community through socially responsible banking.
King County contracts with banks for its accounts, which amount to $250 million a year. The county is also the financial custodian for 200 governmental agencies and districts.
The county signs five-year contracts with banks. The legislation requires those banks to demonstrate they are socially responsible by providing financial services to low-income populations and neighborhoods.
When the county opens up bids for banking proposals this fall, the applicants will be required to show how much they invest in low-income communities, whether they provides grants or tax credit investments for affordable housing and whether they loan to small businesses located in low-income neighborhoods, among other requirements.
The law also requires 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.
King County currently contracts its services to U.S. Bank, which already had an “outstanding” rating.
The bank that wins the bid will be required to report to the King County Executive each year on its investment practices. The reports will be publicly accessible.
Councilmember Rod Dembowski sponsored the legislation after he heard from King County residents who are struggling with foreclosures and evictions. He hoped that the law would expose what banks are doing and encourage them to support low-income communities.
Currently, King County officials do not know if its contracted banks are investing in low-income neighborhoods. “It really shines a light on them,” Dembowski said.
The legislation is similar to legislation the Seattle City Council passed in August 2013, but it’s not as strict. Seattle requires banks to report on their investment in each zip code in Seattle. The King County law does not require such specific reporting and simply asks the banks to show where they are investing their money.
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