Last Friday the Los Angeles City Council voted to divest from banks that act irresponsibly and prey on residents. Art Levine, Contributing Editor at the Washington Monthly, thinks that that vote was just one blow in the fight against Wall Street abuse. He wants other local governments to follow suit and strike back against damaging financial institutions:
- The convoluted
interest swap deals that have lured cities into paying exorbitant interest rates combine the worst elements of subprime mortgages and so-called “credit default swaps” and other reckless investment bets into one toxic mess spelling fiscal disaster for American cities. Already, cities have paid nearly $30 billion in excess interest and extortionist termination fees while having to drastically cut services and payrolls. Unless they can extricate themselves from this still-legal scam, they’ll have practically no chance to revive their economies and lower unemployment, unions and city officials say.
“The banks crashed the economy, taxpayers saved them with drastic steps [of the bailouts], and now local governments are locked into high interest rates and banks are taking advantage of them,” says SEIU researcher Bahar Tolu in Los Angeles. “We’re saying they need to get out of these deals.”
[...]A start at getting out of this financial mess began with the L.A. council’s action on Friday, also an opening shot at forcing reforms in banking practices — or the city, and other municipalities and states, around the country, could start to move their funds to more potentially responsive community banks. A key element of the legislation is essentially a social responsibility audit of the banks to determine how well they are meeting community needs.
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