NYC Commission Votes to Limit Municipal Deposits at Capital One, KeyBank

The New York City Banking Commission has voted to limit new municipal deposits in the city’s accounts at Capital One and KeyBank.

The three members of the commission voted to do so after the banks “failed to submit required plans demonstrating their efforts to root out discrimination,” New York City Comptroller Brad Lander said in a Thursday (May 25) press release.

Lander also voted against designating three other banks to hold public funds, he said in the release.

“Banks seeking to do business with New York City must demonstrate that they will be responsible managers of public funds and responsible actors in our communities,” Lander said in the release. “Unfortunately, despite several opportunities to do so, five banks failed to comply with the New York City Banking Commission’s designation process — leaving us to conclude that they are not taking meaningful actions to combat discrimination in their operations and are not responsible stewards of public dollars.”

The commission had announced in February that banks must submit materials to demonstrate their commitment to combating discrimination in employment, services and lending to be allowed to receive additional deposits.

Reached by PYMNTS for comment, a Capital One spokesperson provided a statement that said: “Capital One prohibits discrimination and harassment against any applicant, intern, associate, vendor, contractor, customer or client on the basis of protected characteristics. We are proud of our record in New York City and are happy to share publicly available data and information with the Banking Commission. Our 2023 submission was consistent with what we submitted to the City of New York in previous years.”

KeyBank did not immediately reply to PYMNTS’ request for comment.

During the meeting at which these votes were cast, the New York City Banking Commission also instituted additional soundness criteria to evaluate the bank financials of those seeking to hold funds on behalf of city agencies, according to the press release.

“All of the applicants passed the soundness review,” the release said.

In other news related to regulators’ efforts to combat discriminatory practices, the Consumer Financial Protection Bureau (CFPB) released new rules in March that require lenders to disclose demographic details about borrowers.