... to deny someone a job because they have student loans? Or because huge hospital bills from an injury forced them into bankruptcy? Or because they were a victim of identity theft?
Many employers in New York City and across the country routinely use credit reports to discriminate against job applicants with poor credit histories. This puts people in a cruel Catch-22: they can't get a job because they are in debt, and they can't catch up because they are unemployed.
One of these New Yorkers is Alfred Carpenter. After working 20 years in retail, Alfred suffered a serious knee injury playing hockey. Facing catastrophic medical costs, he had to file for personal bankruptcy. Alfred had great experience and good job interviews, but kept being denied jobs because of his credit history. Watch this interview with Alfred Carpenter to hear more about his experience.
Research shows that credit history does not predict a person's job performance, work ethic, or character. Yet the practice has grown in recent years, from 1 in 5 employers in 1996 to 6 in 10 today -- largely as the result of marketing by credit agencies.
To end this abusive practice, I introduced a bill in the City Council today, the "Stop Credit Discrimination in Employment Act," that would ban the use of credit history in hiring, promotion, and firing decisions. Thanks to Demos and the Neighborhood Economic Development Advocacy Project for helping to bring this issue to my attention, and for working in New York and around the country to change it. If you're interested in learning more, or getting involved in efforts to help pass the bill, please e-mail me at email@example.com.
NYC Responsible Banking Act
I'm also very pleased to report that the City Council today took a big step forward in making sure that communities get the credit and banking services they need. After sustained advocacy by the Association for Neighborhood and Housing Development, Brooklyn Congregations United, and others, and with strong leadership from Speaker Quinn and Councilman Al Vann, the Council passed the NYC Responsible Banking Act. The Act will require banks who want to serve as "depository institutions" -- to hold the City's cash after it is collected as taxes, but before it has been spent -- to provide detailed annual reports on how they are meeting the credit needs of New York's communities. I am proud to be a co-sponsor of the legislation.
Here's how it will work: A new Community Investment Advisory Board will conduct an assessment of banking service and credit needs throughout New York City (and particularly in underserved communities). They will then require banks who are applying to serve as depository institutions to provide detailed reports on how they are meeting those needs -- with information on their branches, loans, grants, community development and affordable housing projects, foreclosures and mortgage modifications. The information from the reports and from public hearings will be forwarded to the New York City Banking Commission, which decides which banks will serve as depositories. If the banks want to make money by holding onto our money, they should tell us what they're doing with it. You can read more about the bill here.
Many of the problems we've seen recently in the banking sector, from the bad bets that cost JP Morgan Chase $2 billion this week, to subprime and predatory lending that has costs millions of families their homes, cannot be fixed by the City Council. But I'm proud that we now have a strong Responsible Banking Act - one that will hopefully get a few new bank branches open in neighborhoods that need them, build pressure on banks to modify mortgages and help homeowners keep their homes, and promote responsible lending to preserve affordable housing and help entrepreneurs start small businesses.