Los Angeles Mayor Antonio Villaraigosa and the City Council on Tuesday denounced the $700-billion rescue plan for the nation's financial institutions, saying the deal provides too much power to U.S. Treasury Secretary Henry M. Paulson.
As he asked his department heads for a written update on the impact of the financial crisis on city services, Villaraigosa criticized the bailout plan being reviewed by the nation's lawmakers, saying it lacks the proper checks and balances.
"It's absolutely ludicrous that anybody would propose a $700-billion bailout that could go to more than a trillion dollars . . . without regulation, without accountability," Villaraigosa said at an event focused on attracting clean technology companies to Los Angeles. "The idea that we would do that without any strings attached boggles the mind."
He spoke hours before the City Council passed a resolution opposing the bailout unless it included more "rules and oversight." Council members said they were concerned by the lack of details in the plan and the speed with which it was being advanced.
"No way do I want to give the secretary of the Treasury unbridled power," said Councilman Bill Rosendahl. "This is America. This is a democracy. This is not a communist country where you give all the authority away."
The council's last-minute legislative position on the bailout was drafted by Councilman Tony Cardenas, who conducted a separate hearing on the impact of the economic meltdown on the city's efforts to borrow money.
The council directly oversees about $5.5 billion in debt, money that pays for construction projects and the purchase of property and equipment.
City officials have voiced anxiety about their ability to borrow money to pay for upcoming initiatives. In November, the Department of Water and Power plans to issue $550 million in bonds to help pay for upgrades to its electrical infrastructure.
Two months later, the DWP is scheduled to issue up to $150 million in bonds to improve water quality. If the DWP's borrowing costs go up significantly at the same time that its employees' retirement earnings erode, ratepayers could wind up making up the difference, Cardenas said.
"If this continues in the way it has over the last few weeks, then it's inevitable that the department's going to have to look at our water and power rates," he said.