NYC’s ‘Responsible Banking’ Law Ruled Unconstitutional

NEW YORK (Reuters) -

New York City’s “responsible banking” law, which called for banks holding the city’s over $6 billion in deposits to document how well they meet the needs of low-income neighborhoods, is unconstitutional, a federal judge ruled.

In a 71-page decision made public on Monday, U.S. District Judge Katherine Polk Failla said the 2012 law, which passed over the veto of ex-Mayor Michael Bloomberg, illegally conflicts with both federal and state statutes that regulate banks.

“While the animating concerns of the City Council are valid, the means by which it sought to harness banks to redress those concerns intrudes on the province of the federal and state governments,” Failla wrote.

The act called for an advisory board to review whether banks deserved to receive some of the city’s deposits, based in part on how well they served low-income areas.