Magazine article American Banker

California May Join States Mandating Deep Disclosure

Magazine article American Banker

California May Join States Mandating Deep Disclosure

Article excerpt

California May Join States Mandating Deep Disclosure

LOS ANGELES - California banks that want to do business with state or local government agencies would be deluged with paperwork under terms of a bill recently introduced by a state legislator.

The proposal from Assemblyman Steve Peace, a Democrat from Chula Vista, would require extensive disclosures about minority lending and hiring by banks and thrifts.

The bill's chances in the state legislature are being taken seriously by bankers because of the national attention on inner-city lending resulting from the recent Los Angeles riots.

Dynamics Have Changed

California bankers managed to stop a similar bill in the state legislature last year, but the rioting "has changed the dynamics," said Gregory Wilhelm, director of government relations for the California Bankers Association.

The bankers' group does not officially oppose the bill but "has problems" with it, Mr. Wilhelm said. Bankers are trying to work with the author on revisions.

California would not be unique in tying business deals to minority lending. Twenty-one states and some municipalities already require banks to make some disclosures or maintain certain Community Reinvestment Act ratings to get state business, according to Robert Stumberg, associate director for policy at the Center for Policy Alternatives, Washington.

Most Rigorous Bill Yet

But the California proposal merits special attention.

"This would be the most sweeping legislation," said Mr. Stumberg.

If passed, the state law would require banks and thrifts to publish a breakdown of consumer and business loans by race and ethnic background, gender, and census tract. Banks would also have to tell the public about the race and gender of their top management and directors.

In addition, the bill calls for banks to disclose all philanthropic contributions and to provide a description of their contracts with businesses owned by minorities and women. …

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