Outside of City Hall on Monday afternoon, union activists joined with anti-Wall Street Occupy LA protesters in favor of "The Responsible Banking Ordinance," a proposal that would have the city stop doing business with banks they say are guilty of "irresponsible behavior."
The city needs to be selective about who they do business with, LA Councilman Richard Alarcon said.
Before the protesting crowd, he rhetorically asked, "Are you foreclosing on hundreds, thousands of homes that could have been modified through lending, because if you are, we don't want to give you our financial transactions."
That sentiment was echoed by SEIU Local 721 President Bob Schoonover. In addressing the LA City Council Budget and Finance Committee he said, "All we are really asking is you pick the good banks to deal with."
But the reality of the situation is a bit more complicated than that because banks provide a wide variety of services for the city. In fact, the city could lose millions of dollars in the form of penalties if they pull out of banks that currently provide credit to the city at low interest.
The city is recommending a compromise that would include developing a scorecard for banks that would evaluate banks separate from their investment partners, City Administrative Officer Miguel Santana said. Critics of that plan say it weakens the proposal. The measure still needs to go before the full City Council for approval.
Meanwhile, the city continues to clean up the two-acre park around City Hall where the Occupy LA encampment was. One week after the raid, city officials are still unclear about the cost of cleaning the park. Part of the cost will include pesticide treatments later this week, as well as irrigation and landscaping repairs next week.
Los Angeles weighs steps to hold its banks more accountable Occupy L.A. activists and others seek ambitious reforms for public scrutiny of lending practices, and the city works on a compromise. A vote is due next month.
December 06, 2011|
By John Hoeffel, Los Angeles Times
Under pressure to deliver a law that will hold banks more accountable, the City Council began Monday to debate a proposal that would require some banks seeking the city's financial business to disclose detailed information about their lending practices in Los Angeles.
The proposal falls far short of the ambitious agenda pressed by Occupy L.A., community activists and union workers who drew about 160 protesters to a raucous rally outside City Hall. It would not use the lending information to rate the banks when awarding city contracts for financial services, and it would not apply the reporting requirement to banks that also underwrite the city's bonds.
Miguel Santana, the city's chief administrative officer and the author of the slimmed-down proposal, described it as an attempt to strike a compromise between the banks and community activists. He had earlier warned the council that a proposed "responsible banking" ordinance could cost $58 million or more if it required the city to end contracts with some of its lenders.
He said the proposal would hold banks more accountable by exposing their lending records to public scrutiny. Every year, the banks covered by the proposal would be required to report by census tract on their loans to small businesses and their participation in programs to reduce mortgage principal for homeowners. The proposal would apply to the city's retail bank, Wells Fargo; commercial banks that lend to the city; and any other bank that wants to do such business with the city in the future.
"We're not letting anybody off the hook," he said.
The institutions that do the city's investment banking would be subject to different corporate responsibility reporting requirements, such as detailing their involvement in local charities or scholarships.
But Councilman Richard Alarcon, who proposed the "responsible banking" ordinance two years ago, told the Budget and Finance Committee on Monday that rating the banks based on the lending data was key to the proposed law's aim to prod the banks to do more to help distressed homeowners and invest in the community. "Under a rating system, I believe we would create a race to the top," he said.
He also encouraged the committee to consider extending the lending reporting requirement to banks that are involved only with the city's investment banking business, which he said would go beyond what other cities have done. "We can be cutting-edge. We can be first in the nation," he said.
At the same time, Alarcon also said he was pleased that the council was moving forward on the long-stagnant issue. At the rally, Alarcon credited community pressure for dislodging the idea. "We've come a long way because of this loud voice that has come from the people," he said.
The crowd held placards saying "We are the 99%" and "Hold Banks Accountable" and a big banner reading "Take Taxpayer Money Out of Wall Street Banks." Protesters, led by Michael Green, a deputy regional director with SEIU Local 721, sang out a rhythmic call-and-response to the snappy accompaniment of a snare drum and a bass drum.
"Banks got bailed out!" Green chanted. "We got sold out!" the crowded yelled.
Bob Schoonover, the local's president, told the crowd, "Wall Street banks shattered this economy, which led to people losing their jobs, their houses. It led to local government's funding being devastated, affecting city services. But the odd thing is they got bailed out by you know who. Us."
Santana's proposal called for the council to pass a broad ordinance that would commit the city to requiring banks to disclose lending information but would leave the details to be worked out by an ad hoc group that would make recommendations by the end of June. He suggested it include community activists, banking industry representatives and city officials. Alarcon countered with a proposal for a larger group that would also include community reinvestment experts.
The budget committee appeared poised to make a decision, but it postponed a vote until January to allow time for Santana to pull together a report that compares the competing proposals.