The Boston City Council unanimously passed a bill Wednesday aimed at improving banking practices in low- and moderate-income neighborhoods.

The "Invest in Boston" bill requires banks seeking city-government business to submit to an evaluation process that examines their mortgage and small-business lending practices as well as their performance in community reinvestment, personal lending and local hiring. Boston is the fourth major city to pass such a law in the past two years, following New York, Los Angeles, and San Diego.

Under the ordinance, a 10-member committee made up of government, community and industry representatives will assess banks on the strength of their foreclosure prevention and loan modification programs, community development loans and other factors. Banks that score in the top 25% of their peers may gain more city business, while lenders in the bottom 25% will be ineligible for city deposits.

The Association for Neighborhood & Housing Development, which helped New York City pass its Responsible Banking Act in 2012, backed the Boston bill.

While responsible-banking ordinances tend to garner broad public support, some industry participants are skeptical.

"These local ordinances are superfluous," banking lawyer Warren Traiger told American Banker last year. "Banks already have a sufficient degree of federal and state oversight with respect to how well they're serving their communities."

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