We are in the worst economic recession of our lifetime. Most economists agree that we will not get out of this recession until banks start making credit available to qualified applicants. Every taxpayer in this country bailed out the banks. We were told that as the banks got bailed out, they would then invest in our communities. Yet, while Wall Street was bailed out, we know that our Main Streets have not been bailed out.
I believe that those of us in government have a responsibility to encourage banks to invest in our City. When banks invest in our City again, we will see more jobs, a stronger housing market, less foreclosures and vibrant small business districts.
This is why I authored the “Invest in Boston” ordinance on Wednesday, October 6th. This ordinance will ensure that the City of Boston only invests in banks that invest in Boston. As of December 31, 2009, the City of Boston had over 1 billion dollars invested in various banks. I believe that the public money —your money—should only be invested in banks that invest in your community.
Invest in Boston means: lending to qualified homebuyers; refinancing loans so that people can take advantage of the low interest rates being offered today; lending to small businesses so that they can expand and create the jobs we need; investing in development projects in Boston so that the men and women in the trades can get back to work; and participating in foreclosure prevention programs; following our state’s usury law by only charging 18 percent on credit cards.
In addition, the ordinance will create a Municipal Banking Community Investment Commission. The Commission will be responsible for judging the bank’s application and ranking them against themselves. This will make sure the City of Boston only invests in banks that invest in Boston.
The need to change the way the City of Boston chooses who to bank with is crucial given the current economic climate. Unemployment rates are at record highs, making it difficult for families to support themselves. Jimmy Coyle, Secretary-Treasurer of the Boston Building Trades Council, informed us that those in the trades are facing roughly fifty percent unemployment, and the difficulty in gaining access to loans for construction projects is a major reason for the incredibly high unemployment rate.
The number of foreclosures is still on the rise. Lifelong Boston residents, like Nancy and Abby Cook, who have lived in their home for 39 years, are facing the risk of losing their home to foreclosure. Instead of negotiating fair mortgage terms with the Cook family, Wells Fargo is instead threatening to foreclose on a refinanced loan that was provided to the Cooks at the height of the real estate bubble.
While there are many families like the Cooks that face economic woes at the hands of financial institutions, recent information has been released showing that many of these foreclosures may have occurred erroneously and fraudulently. This has led many financial institutions, including Bank of America, to announce they will temporarily halt foreclosures. The more foreclosures that take place, the more our city faces vacant lots and abandoned properties that oftentimes become dens of criminal activity.
Foreclosures are not the only problem our residents are facing. After touring more than 20 small business districts over the last three months, I saw more empty storefronts than I have seen in recent memory. During the visits, I heard firsthand of the difficulties small business owners are facing and, in particular, how hard it is for them to access a loan. Many of these small businesses have been operating for years, and simply need a loan for reasonable upkeep and expenses.
At a City Council hearing I chaired earlier this year on this issue, one business owner, Michel Soltani of The Mission Restaurant in Mission Hill, testified that he could not secure a $15,000 loan this past summer to update an air conditioning unit in his restaurant despite having an 800 credit score and fifteen years of experience running small businesses in our city.
I look forward to working with all my colleagues on the City Council as well as with the Administration on this issue. However, the most important voice in this process is yours. Please feel free to call us at 617-635-4205 or email me at firstname.lastname@example.org.
Together we can ensure that the City of Boston only invests in banks that invest in Boston.
Felix G. Arroyo is a Boston City Councilor At-Large.