Why Bank Transparency Matters: a Comparison of the U.S. and the U.K.

 

FOR IMMEDIATE RELEASE

 

Contact:   

 

Geoff Smith, Research Director, Woodstock Institute: (312) 427 8070

Malcolm Bush, President, Woodstock Institute, mbush@woodstockinst.org

Jessica Brown, Project Leader, new economics foundation, jessica.brown@neweconomics.org

 

Full Disclosure

Why Bank Transparency Matters: a Comparison of the U.S. and the U.K.

 

[Chicago]-This new report issued by the new economics foundation in London, England, and Woodstock Institute in Chicago, shows the huge disparity in the amount of bank performance data from lower-income neighborhoods available in the U.S. and the U.K.  This disparity is most stark when considering available data on mortgage lending and small business lending patterns in underserved lower-income and minority neighborhoods.  To illustrate these differences, the report describes the data provided by two banks belonging to the same bank holding company.  The U.S. case study uses data from Charter One Bank in Chicago, the U.K. case study data from Charter One’s parent bank, Royal Bank of Scotland in Manchester. 

 

The report concludes:

 

• Banking services are a central part of tackling financial exclusion in lower-income communities

 

• Full disclosure allows for assessments of who the banks are reaching and who remains outside of the banking system.

 

• Without area-based bank disclosure, communities are in the dark as to how their savings and resources are being invested. 

 

In the forward to the report, Sir Ronald Cohen, a leading European venture capitalist, and chairman of the U.K. Social Investment Taskforce, questions the current British reliance on voluntary bank disclosure.  Co-author of the report, Geoff Smith, comments that while the report shows that mandatory disclosure in the U.S. results in far more useful data than reliance on voluntary data produces in the U.K., there are large gaps in the U.S. system.  “At the very least”, he said, “we need small business disclosure at the loan level as we have for mortgage data, since small business activity is critical to the economies of lower-income communities.”  Woodstock’s president, Malcolm Bush added, “The U.S. data disclosure system has not kept up with changes in the very dynamic financial services sector.  It is critical to extend disclosure and indeed Community Reinvestment Act responsibilities to all financial institutions that provide bank-like services including independent mortgage companies and credit unions. 

 

icon  Full Disclosure: Why Bank Transparency Matters

 

Woodstock Institute, founded in 1973, is a nationally-recognized resource on credit and capital needs of low-income and minority communities. The Institute engages in applied research, policy development, and technical assistance to promote community economic development.