Denver Putting a Monetary Squeeze on Banks to Deter them from Foreclosing

Denver is putting a monetary squeeze on banks to deter them from continuing with foreclosures. The officials are anxious to put brakes in the worst affected localities and telling the banks to do more to assist the banks otherwise they would forfeit huge government deposits.

Michael Hancock and Paul Lopez, members of the City Council has recently been studying data to find out which of the lenders are responsible for most of the foreclosures. They plan is to use this information to hone in on lenders to clear the mess. They have however different approaches to reach their goal.

Lopez said that he was mulling over a recent step taken by the Los Angeles City Council to calculate in figures the pace of the cooperation of banks regarding foreclosure prevention. The banks given a low rating would not be given deposits by the city – the amount not being negligible counting up to $30 billion as savings and pension funds. Philadelphia has already removed funds from BNY Mellon because of a growing feeling that the bank was not granting loans to the minorities. Two more banks are also going to be ostracized for similar related reasons. The lawmakers in Maryland, Minnesota as well as New Mexico have showed their preference for community banks.

If a similar step is taken in Denver then it would involve annual deposits made by the city amounting to $2.4 billion together with another $1.7 billion as investments in pension.

The elected officials are angry about the indifference of banks to help contain the increasing foreclosure menace all over the states and cities.

Richard Alarcon, the councilman of Los Angeles who had taken the initiative in this direction said, “To the extent that we are sending money to be invested outside the region, we have to understand what the benefits are that we are getting out of that at the local level” The measure is expected to be implemented from next April. He added, “Sometimes we need to look beyond just measuring the interest rate, because those dollars can recycle in our communities and make our communities much more economically strong.” In Los Angeles the issue is particularly serious because about 4% of the houses in the city had been stained with foreclosure in 2009 as per the findings of RealtyTrac. In Denver the proportion had been 3%.