Boston and Minneapolis are the latest in a string of cities -- including Pittsburgh, Kansas City, and at least 10 others -- to pass "responsible banking ordinances" that demand more lending activity in poor neighborhoods. The laws also stipulate that banks disclose more data about the loans they make for affordable housing in economically downtrodden areas as well as report more information on loan workouts and foreclosures in low- and moderate-income markets.
Banks that fail to satisfy the requirements risk losing the city as a customer. While the local provisions are highly similar to those of the federal Community Reinvestment Act, Josh Silver of the National Community Reinvestment Coalition says they have a sharper emphasis. "The CRA has been effective," he concedes, but it applies to wide service areas. "You won't see neighborhoods examined in a CRA exam."