A New York federal judge has annulled New York City’s responsible banking law, which requires banks to document how well they meet the requirements of poor neighborhoods.
The Responsible Banking Act of 2012 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.
The law was challenged by the New York Bankers Association (NYBA), which comprises over 150 members including Bank of America, Citigroup, Goldman Sachs Group and JPMorgan Chase.
The Judge Katherine Polk Failla, in a 71-page verdict, said though the law may have been passed with the best intentions, it was unconstitutional as it gave the city too much power.
The law illegally conflicted with federal as well as state statutes regulating banks, the judgment said.
"This is an important decision for the banking industry with nationwide ramifications. The banks in New York will continue to be supervised by state and federal regulators, and will continue to reinvest in the communities in which they operate," NYBA president Michael Smith said in a statement.