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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.

JPMorgan Chase, Wells Fargo and four other big banks are facing new restrictions on their mortgage operations after a federal regulator determined the banks did not do enough to fix problems in their foreclosure practices in the aftermath of the financial crisis, the New York Times reported today. The banks had promised in 2011 to change the way they handled foreclosures in a consent order with the Office of the Comptroller of the Currency (OCC), a top bank regulator. The OCC said yesterday that three large banks — Bank of America, Citigroup and PNC Financial — had complied with the 2011 order and an amended version in 2013 and no longer faced restrictions. But JPMorgan, Wells Fargo, Santander, HSBC, US Bank and EverBank will face new limitations on their ability to acquire mortgage servicing rights from other banks. However, they will not face restrictions on the servicing of mortgages that the banks issue themselves. The OCC also said yesterday that it was handing over to states about $280 million that it had received as part of a 2011 settlement related to the financial crisis.

A court ruled on Friday that California is obligated to return $331 million that it took from a fund designated to help troubled borrowers but instead used to plug holes in the state’s budget, the New York Times reported today. The ruling, by a state court judge in Sacramento, came in response to a lawsuit filed last year against Gov. Jerry Brown by three nonprofit groups offering counseling to homeowners. They contended that Brown improperly diverted some of the money California received in 2012 as part of a $25 billion nationwide settlement with the country’s largest banks over mortgage servicing improprieties. The plaintiffs argued that $350 million of California’s share of the settlement was wrongly removed from a special fund dedicated to helping troubled homeowners avoid foreclosure through counseling and other educational services.