Good afternoon, Chair Sanders, Members of the Banks Committee, and esteemed legislators. Thank you for the opportunity to testify today on behalf of New Economy Project, a New York City-based economic justice organization. For 30 years, New Economy Project has worked with community groups and low-income New Yorkers to challenge bank redlining, predatory lending and debt collection, and other inequities in our financial system that entrench poverty and inequality. We also partner with community organizations to advance public banking, cooperative and community-controlled finance, community land trusts, worker cooperatives, and other initiatives that democratize our economy and build lasting community wealth and power.
New Economy Project has played a key role in organizing broad-based coalitions and campaigns that have secured major policy changes benefiting low-income New Yorkers and Black and brown communities statewide. We have successfully kept payday lending and other debt traps out of New York State, won strong anti predatory lending and foreclosure prevention legislation, protected New Yorkers’ public benefits and wages from abusive debt collection, and secured funding for the country’s first state-based fund for community development financial institutions, for example. Through our nationally-recognized NYC Financial Justice Hotline, New Economy Project has provided direct legal assistance to thousands of low-income New Yorkers and brought impact litigation against major banks, debt buyers, and other financial actors—securing well over $1 billion in monetary awards and other relief for low-income New Yorkers.
New Economy Project thanks Senator Sanders for convening this timely hearing in response to our report, released last fall, documenting stark disparities in mortgage lending approvals and interest rates, by race, in New York City.
Today’s hearing poses the question: Is there discrimination in the New York home mortgage banking industry? The answer, unequivocally, is yes. Despite state and federal laws prohibiting lending discrimination, low-income and Black and Brown communities have been profoundly shaped and harmed by decades of redlining, disinvestment, and predatory lending. New Economy Project has long documented mortgage lending and foreclosure disparities, by race and income, in New York City and State. Far from being a relic of the past, redlining and its effects have fueled persistent racial gaps in wealth, educational attainment, health, and even life expectancy—over generations.1 These deep-seated inequities represent grave policy failures requiring bold, focused action.
In my testimony today, I will focus on four key points: First, mortgage discrimination persists across New York, as detailed in our report. Second, our unequal banking system serves to extract wealth from low-income and Black and Brown communities—fueling the racial wealth gap. Third, federal retrenchment, including the gutting of the Consumer Financial Protection Bureau (CFPB), will further unleash predation, requiring New York to swiftly and forcefully act. In addition to stepped up regulation and enforcement, New York must take bold action to transform our financial system—starting with enacting public banking.
1. Mortgage Discrimination Persists Across New York State.
New Economy Project’s fall 2024 report, which we have attached to our testimony, analyzed home mortgage lending by Bank of America, Citibank, and JPMorgan Chase—the three banks that hold the vast majority of New York City’s municipal deposits—between 2018 and 2023. We found that the banks charged Black homebuyers in New York City interest rates that were, on average, 31 basis points higher than rates charged to other homebuyers—even when controlling for income and debt levels.2 This disparity means that a Black borrower will pay an additional $30,212 in interest payments—and Black homebuyers will collectively pay $32 million more than other borrowers—over the life of their loans.3
From 2021 to 2023, the disparities were even more glaring, with the banks charging Black homebuyers in New York City interest rates that were, on average, 49 basis points higher than those charged to white borrowers. Even more striking, Black borrowers earning more than $100,000 paid higher interest rates than white borrowers with lower incomes.4
These findings echo those of a 2023 statewide study by the Office of the NYS Attorney General, which revealed that in New York, “all applicants of color are denied mortgages at higher rates than white applicants, regardless of credit score, income, size of the loan, and other factors. Even among borrowers with the highest credit scores, non-white mortgage applicants are denied a mortgage at nearly double the rate of white applicants.”5
New Economy Project also found that Black homeowners faced higher barriers to refinancing. Over the six-year period examined in our report, Bank of America, Citibank, and JPMorgan Chase denied refinancing loan applications from Black homeowners at nearly twice the rate of white borrowers—23.4% compared to 12.8 —preventing Black homeowners from accessing lower interest rates. This was particularly damaging during the COVID-19 pandemic, when mortgage rates reached historic lows.6 While others secured advantageous interest rates, Black homeowners were locked into higher payments.
Although the Federal Reserve’s recent rate cuts have yet to significantly lower mortgage rates for homebuyers, our findings raise concerns that if and when they do, Black homeowners may once again be excluded from financial relief. The CFPB raised this concern in a September 2024 report, warning that falling rates could further widen the racial wealth gap.7
2. Our Banking System Serves to Extract Wealth from Low-Income and Black and Brown Communities—Fueling Inequality.
Mortgage discrimination is just one facet of a broader financial system that fuels poverty and inequality in New York State. Take, for example, the distribution of bank branches in New York City, which are disproportionately concentrated in majority white neighborhoods (see attached map). Ongoing branch closures also have an outsized impact on low-income neighborhoods and communities of color in the city.8 The Federal Reserve has shown that the presence of local bank branches facilitates relationship banking, leading to improved lending outcomes for small businesses, for example.9 Yet in Black and brown neighborhoods, these relationships—so critical for financial stability and economic opportunity—are systematically denied.
Prohibitive identification requirements, language barriers, and high and hidden fees further erode fair banking access. During the first year of the pandemic, for example, banks extracted a shocking $1.7 billion in overdraft fees from struggling New Yorkers, according to our organization’s first-of-its-kind analysis.10 Overdraft fees are overwhelmingly borne by banks’ poorest customers, with 80% of overdraft fees paid by just 9% of customers.11 Through our NYC Financial Justice Hotline, we have assisted low-income New Yorkers experiencing financial hardship as a result of overdraft fees, ChexSystems blacklisting, and other abusive tactics that push many low-income people out of the banking system entirely.
A 2023 Forbes study ranked New York State sixth worst in the country for banking access. The study found that NYS has the seventh highest percentage of households without a bank account (5.90% of households) and the fifth lowest number of banks and credit unions per capita.12 In the Bronx, which lost nearly 10% of its bank branches from 2018 to 2021, more than 17% of households lack a bank account.13
New Yorkers excluded from traditional banking are relegated to using high-cost, under-regulated, and often predatory financial services that thrive in the void banks create. Check-cashing outlets, pawn shops, and high-cost installment lenders fill this gap, extracting massive sums from communities and keeping people trapped in cycles of debt and financial instability. In New York City, just 29% of bank branches are located in communities of color, compared to 54% of check cashers and 67% of pawn shops.14
Now, a new wave of financial predation is taking hold in New York with the rise of so called “Earned Wage Access” apps—payday lending in disguise. Marketed as paycheck advances, these fintech schemes impose effective APRs averaging over 330% through hidden fees and deceptive “tips,” blatantly violating New York’s 25% criminal usury cap. Unlike traditional payday lenders, these apps automatically withdraw funds from users’ accounts, triggering overdraft fees and keeping people trapped in cycles of debt. The state must act now: the Attorney General and DFS must enforce existing laws against illegal fintech lending, and lawmakers must pass the End Loan Sharking Act (S1726/A4918) to shut down these predatory schemes for good.
But we must also recognize that the big banks are the architects and beneficiaries of this system. The three banks we analyzed in our mortgage lending report—Bank of America, Citibank, and JPMorgan Chase—hold collective assets worth more than the GDP of most countries. Their unchecked influence extends far beyond consumer banking. These same banks finance extractive and destructive industries, from speculative real estate to climate-destroying fossil fuel projects.15 It’s time New York held them accountable.
3. Federal Threats Will Further Unleash Predation, Requiring New York to Act.
Since the Trump administration took office in January 2025, it has acted swiftly to roll back regulations and dismantle the Consumer Financial Protection Bureau (CFPB), a vital watchdog agency charged with protecting communities from financial discrimination and abuse.16 Established in the wake of the subprime lending foreclosure crisis, the CFPB has played a crucial role regulating banks, mortgage lenders, credit reporting agencies, and other entities that affect people’s economic lives. Its supervisory and enforcement actions have secured tens of billions of dollars in relief for people harmed by overdraft fees, mortgage fraud, and other abuse. By slashing the agency’s workforce and suspending its operations, the Trump administration has gutted a powerful line of defense between communities and financial predators.
In the context of escalating federal threats, New York must take bold action, not only to bolster its regulatory infrastructure to protect people and communities from financial exploitation, but also to advance systemic solutions that address root causes of banking inequality. Our state has a vital role to play in cracking down on unfair and discriminatory lending, through legislative, regulatory, and enforcement actions. At the same time, New York must pursue solutions that fundamentally challenge Wall Street’s grip on our financial system.
State policymakers have relied on policies like the Banking Development District (BDD) program and the Linked Deposit Program to expand banking access, but these initiatives largely amount to subsidies for private banks with little accountability. The underlying assumption—that incentivizing banks will lead to more equitable servic —has failed to deliver meaningful results. According to forthcoming research from our organization and coalition partners, mortgage lending has actually declined in more than two-thirds of the state’s BDDs, and total lending has dropped in half of them.
Public banking offers a systemic response to financial inequities that have long plagued New York’s communities. Currently, state law requires local governments to deposit public funds in commercial banks, effectively entangling public money in harmful bank activities, from financing fossil fuels and real estate speculation to engaging in discriminatory mortgage lending. As our 2024 lending report revealed, more than three quarters of New York City’s public deposits are held in banks that fail to serve Black communities equitably.
Unlike private banks, which seek to maximize profits and shareholder returns, public banks are chartered to serve the public interest. They hold public deposits and reinvest in critical needs, like affordable housing and responsible mortgages, small business development, renewable energy, and other local economic development. A recent study by economists at The New School’s Center for New York City Affairs demonstrates the tremendous impact a NYC public bank would have on our economy, in just its first five years:
- 70,000 jobs created;
- Over 17,000 affordable homes built or preserved;
- $1 billion in climate investments; and
- $5.8 billion in new CDFI lending, including $500 million in new mortgages—helping build generational wealth in Black and brown communities.17
A public bank would partner with and strengthen community development credit unions and other responsible lenders, ensuring that communities of color have access to fair and affordable loans. This partnership model is inspired by the century old Bank of North Dakota (BND), established in 1919, which operates as a wholesale lender—partnering rather than competing with local banks and credit unions to expand access to credit and strengthen the state’s economy.
The BND’s model has proven highly effective in strengthening the local banking sector and stabilizing the state’s economy, with North Dakota boasting the highest concentration of local banks and credit unions in the country.18 During the COVID-19 pandemic, for example, BND helped deliver more Paycheck Protection Program (PPP) loans per capita than any other state.19
To realize this transformative potential, New York must take bold legislative action this session. The Bank of Rochester Act (S1708), which passed the state Assembly Banks Committee last year, would establish the first full-fledged municipal public bank in the country. Modeled on the New York Public Banking Act (S1992/A6268), sponsored by Chair Sanders, the bill would serve as a launching pad for public banking statewide.
These bills enjoy widespread support. A majority of the Senate sponsors the New York Public Banking Act, alongside more than 150 community groups and over 100 local elected officials representing 33 cities and counties across the state. The momentum behind public banking is undeniable; now, lawmakers must act to ensure public money works for public good. New York has a unique opportunity to lead the nation in reimagining its financial system—with bold, systemic solutions that address root causes of inequality.
Thank you for the opportunity to testify today.
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1 See, e.g., National Community Reinvestment Coalition, Redlining and Neighborhood Health, at https://ncrc.org/holc-health.
2 New Economy Project has since repeated our analysis of mortgage lending disparities, including loan-to-value ratios (LTV) in our model, and found LTV had no statistically significant impact on the results.
3 New Economy Project, Analysis: Fed Rate Cuts May Exacerbate Racial Wealth Inequality Due to Persistent Mortgage Lending Disparities, available at https://www.neweconomynyc.org/resource/analysis-fed-rate-cuts-may-exacerbate racial-wealth-inequality-due-to-persistent-mortgage-lending-disparities/
4 Ibid.
5 Office of the New York State Attorney General, Racial Disparities in Home Ownership, available at https://ag.ny.gov/sites/default/files/reports/oag-reportracial-disparities-in-homeownership.pdf
6 Ibid
7 Consumer Financial Protection Bureau, Data Spotlight: The Impact of Changing Mortgage Interest Rates, available at
https://www.consumerfinance.gov/data-research/research-reports/data-spotlight-the-impact-of-changing-mortgage-interest-rates
8 ANHD, How Branch Closures Impact Hard Hit Communities, available at
https://anhd.org/blog/how-branch-closures-impact-hard-hit-communities
9 Federal Reserve Board, Out of Sight, Out of Mind: Nearby Branch Closures and Small Business Growth, available at
https://www.federalreserve.gov/econres/feds/files/2024071pap.pdf
10 New Economy Project, New Analysis Shows Banks Drained $1.7 Billion in Fees From New Yorkers’ Accounts During Pandemic, available at https://www.neweconomynyc.org/2021/06/new-analysis-shows-banks-drained-1-7-billion-in-fees-from-new-yorkers-accounts-during-pandemic
11 Brookings Institution, Getting Over Overdraft, available at https://www.brookings.edu/articles/getting-over-overdraft/
12 Forbes Advisor, States With The Best And Worst Banking Access, available at
https://www.nasdaq.com/articles/states-with-the-best-and-worst-banking-access
13 NYC Department of Worker and Consumer Protection, Where are the Unbanked in NYC?, available at https://www.nyc.gov/assets/dca/downloads/pdf/partners/Research-UnbankedNYC 2021Data.pdf
14 Federal Deposit Insurance Corporation, Summary of Deposits, available at https://banks.data.fdic.gov/bankfind-suite/SOD; U.S. Census Bureau, American Community Survey data, available at https://data.census.gov; City of New York, NYC Open Data, available at https://opendata.cityofnewyork.us/; data obtained via Freedom of Information Law request from the New York State Department of Financial Services.
15 Rainforest Action Network et al., Banking on Climate Chaos, available at https://www.bankingonclimatechaos.org
16 NPR, Dozens of CFPB Workers are Fired as the Agency Remains Shuttered, available at https://www.npr.org/2025/02/12/nx-s1-5294479/cfpb-workers-fired-trump-doge
17 James Parrott and Michele Mattingly. The Economic Impact of a New York City Public Bank, available at https://www.centernyc.org/reports-briefs/the-economic-impact-of-a-new-york-city-public-bank
18 Bank of North Dakota. 10/28/24 Press Release, available at https://bnd.nd.gov/bnd-addresses-inaccurate-reporting/
19 The Washington Post. North Dakota businesses dominated the PPP, available at https://www.washingtonpost.com/business/2020/05/15/north-dakota-small-business-ppp-coronavirus/