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Superintendent Richard H. Neiman's Remarks before the Neighborhood Housing Services of New York City, Inc. RIAC Annual Breakfast


Before the

May 4, 2010

A. Introduction

Thank you, Bernell for that warm welcome and for all you and NHS do to improve the lives of thousands of working families.  In 2009, NHS invested $161 million in our City’s neighborhoods and provided pre- and post-purchase homeowner education for more than 10,000 residents. That investment of time and resources is already yielding significant results.  NHS helped 245 families obtain fixed-rate mortgages, which translates into over fifty million dollars of affordable financing.  And about the same number of families facing foreclosure were able to save their homes with NHS’s assistance.

B. The Need for Meaningful Change

These accomplishments are all the more remarkable given the tremendous economic pressures of the past year. The financial crisis has intersected with a recession that continues to linger. Helping the hardest-hit neighborhoods has only become harder. Bernell rightly spoke about this as a time of change, both for families and for organizations that support sustainable communities.

I believe that to capture this moment, this time of change, and harness it for progress also means that we must enact substantial regulatory reforms.  We need to learn the lessons from this crisis and adopt both stronger consumer protections and stronger measures to reduce systemic risk. Whatever the outcome of the national debate, however, operational reforms may be most effective at the local level. Proximity matters.  We need to retain a vibrant state banking system.  States like New York not only fight lending abuses and predatory practices, but also promote innovations at the local level. 

This morning I would like to share two areas in which the Banking Department is transforming our economic inclusion initiatives: enhancements to the Banking Developments District or BDD program, and promotion of affordable products and services.

C. BDD Program

The current foreclosure crisis is partially a result of insufficient access to traditional credit.  When banks are absent from a community, non-banks or even predatory lenders may fill the vacuum.  Lack of access is only part of the problem, however- we also need innovative products and services tailored to the needs of currently unbanked or under-banked consumers. The BDD Program provides financial incentives to banks to fill these gaps. The goal is to combine access to the right products and services with financial literacy, developing long-term customer relationships and greater opportunities for economic inclusion.

Through the BDD program, banks that open branches in underserved areas have the opportunity to receive below-market rate deposits from the State.  Branches within the five boroughs may also receive these deposits from the City of New York. But these privileges come with a special responsibility to partner with the community in meeting local needs.  I am proud of the achievements of our program as a whole, but we want to ensure that the BDD program continues to be a force for change.

Last year we held community hearings across the state on the BDD Program, to solicit feedback and ideas for improvement from a wide range of stakeholders.  I am pleased to announce that today we are releasing a report with the findings from those hearings- and more importantly, the action steps we are taking as a result of those findings.  The report is detailed and a copy is posted on our website at But let me quickly share with you two examples of the kind of meaningful changes we will be implementing.
  1. Financial Education.  The provision of financial education will now be a requirement for program participation.  We strongly recommend that branches consider fulfilling this requirement by partnering with a third-party for whom such services are a part of the organization’s primary mission.
  2. Affordable Products and Services.  As important as expanding branch access is, it is even more important to ensure that those branches are offering appropriate products. Therefore, applications for the BDD program will be required to include more detailed information on the features associated with their “affordable” products, including costs. Many branches have innovative offerings, such as small dollar loans, remittance products, technical assistance, and free tax preparation services.  However, we believe that more needs to be done.  In fact, we have had to place several BDD banks on probation for failing to meet the goals laid out in their original application.

D. Affordable Products and Services

We are also ramping up our efforts to encourage all banks, and not just BDD branches, to provide affordable banking products and services.

Bank on Manhattan

A major initiative is our collaboration with the Manhattan Borough President's Office in the “Bank on Manhattan” campaign.  To correct the high unbanked rate in Manhattan, the Bank On project takes a multi-pronged approach through coordinated efforts in product design, financial education, and multilingual outreach. 

First, Bank On is developing a low-cost, low-risk checking account, with features designed to help under-banked households successfully transition into the financial mainstream.  For example, customers will have a choice of having a debit card with opt-in overdraft protection, or having an ATM card with no debit feature.  This will help customers avoid being trapped by expensive and unexpected penalty fees.  The account also provides a second chance those with certain types of previous unfavorable account histories in the ChexSystem, subject to completion of financial education.

I’m pleased to say that many banks and credit unions have signed on to offer products that will comply with these Bank On features.  We expect to launch the public campaign to invite customers to open these accounts in July.

This renewed emphasis on product design goes hand in glove with our focus on revitalizing CRA as a tool for economic inclusion.  We want to foster a more holistic approach to CRA compliance, not just a check-the-box mindset, and emphasize qualitative results over quantitative ones in our examinations.  To that end, we are meeting with stakeholders to discuss how we currently rate institutions for CRA and to gather their input. We have been doing this independently and as part of RIAC.

E. Conclusion

The supervisory and public-private partnerships we form through RIAC and NHS are integral. Together we are working to ensure that low and moderate income families and small businesses weather this recession and are part of the future economic recovery.

I look forward to this breakfast every year, as a gathering to strengthen our ties and spark new ideas to build New York communities. Thank you.


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