The Los Angeles City Council has voted to move its money out of banks that fail to protect citizens from losing their homes. Dennis Santiago was in the room at the time and reports:
- Another landmark piece of legislation was passed today.
The City Council of Los Angeles voted 12-0 to pass Councilman Richard Alarcon’s motion 09-0234, also known as the “responsible banking practices” motion. This will set the City on a path to require banks doing business with the City, or seeking to do business with the City, to report on the details of their local reinvestment in the community. The ordinance to be drafted will tie a bank’s involvement in the community to contracts for the City’s operating funds and pension programs worth up to $28.9 billion dollars.
The bill creates a “report card” that evaluates banks looking to do business with the city based on their record on mortgage modifications and small business lending, among other things. Banks that do not meet the standard would not receive city funds.
The Associated Press’s Rachel Beck reports:
- If the banks don’t comply, they risk getting replaced by banks that do. The price for getting tossed: Lost access to nearly $30 billion in city savings and pension funds.
“We need to challenge the financing institutions that got us into this mess,” says Richard Alarcon, a Democrat who introduced the city council’s motion that passed 12-0 earlier this month. “Responsible local investments are critical for our economy.”
Think of what’s happening as a reward system for any banks that are willing to help Los Angeles’s population of 3.8 million.
This means that Los Angeles has chosen to use its money to help its own communities instead of abusive banks. Way to go everyone!
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This is an awesome decision from the City of L.A. Unfortunately, Arizona doesn’t look like it will follow suit any time soon. In yesterday’s (3/5)Phoenix Business Journal, an article notes the broken Arizona economy as the reason why the state can’t shift to smaller lenders now, but stick with biggies like B of A that can handle the enormous deficits. Not sure if individual cities in AZ are considering any moves yet. Would be a great idea though.
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I think its great that los angeles is stepping up to B of A and its true Arizona needs to step it up