A law passed by New York City three years ago that required banks to make public their efforts to be socially responsible, particularly in low-income neighborhoods, is unconstitutional, according to a federal court ruling, the New York Times reported today. In a decision released on Monday, Judge Katherine Polk Failla of Federal District Court in Manhattan said that the law, called the Responsible Banking Act, conflicted with existing federal and state statutes that regulated banks. “A review of the extensive record in this case confirms that while the animating concerns of the City Council are valid, the means by which it sought to harness banks to redress those concerns intrudes on the province of the federal and state governments,” Judge Failla said. A spokesman for the New York City law department said officials there were “considering our options.” The controversial 2012 law created an advisory committee that would assess whether banks that held more than $6 billion in city deposits were providing robust credit to small businesses and modifying mortgages in low and middle-income neighborhoods. After the financial crisis, other large cities passed or weighed similar measures. Immediately after the New York City law was passed, Michael R. Bloomberg, then the mayor, vetoed it, calling it a “misguided attempt” to influence banks by overlaying extensive state and federal regulation. While the City Council overrode his veto and enacted the law, Mayor Bloomberg delayed its start by refusing to appoint anyone to the bank advisory board. After Bill de Blasio was elected mayor in late 2013, the city took steps to enforce the law, including making appointments to the oversight committee.
