Supporters of the "responsible banking" ordinance rally outside… (Michael Robinson Chavez…)
Joining a growing number of municipalities, the Los Angeles City Council on Tuesday adopted a "responsible banking" ordinance that will require banks doing business with the city to disclose detailed data on loans and foreclosure activity by community.
Much of the information is already reported under federal law but can be hard to find in voluminous federal banking reports, said Miguel Santana, city administrative officer. The new law would bring the information together on a city website that the public could search by census tract, he said.
Banks that decline to provide the information will be deemed unqualified to bid for a piece of the city's $6 billion in deposits and pension funds, Santana said. The law will enable the city and its residents to identify which banks are helping the community and which aren't, said Councilman Richard Alarcon, who wrote the legislation.
"Banks know we are prime customers," Alarcon said of the city. "And we ought to leverage that with this opportunity."
Tuesday's unanimous vote comes after an earlier version that would have created a "scorecard" rating banks' social responsibility was dropped. Budget managers warned it would be too costly to create the infrastructure needed to support a ranking.
Another provision to sever ties with financial institutions found liable of wrongdoing also was dropped.
Alarcon based the law on programs in Cleveland and Philadelphia. New York adopted a similar ordinance Tuesday. Other cities that have adopted or are considering such an ordinance include San Francisco, Berkeley, Seattle and Boston.
A large contingent of labor, faith-based and Occupy activists spoke in favor of transparency, though some expressed disappointment that the ordinance didn't go further. "It doesn't say we will divest money from banks who are being irresponsible," said Cheryl Aichele of Occupy L.A., who also expressed concerns about endorsement and auditing.
Beverly Roberts, who said she's been trying to get a loan modification on her home for four years without success, supported the measure as a good first step.
"You know what? I'm tired," she said. "I'm 75 years old. Just make them responsible and do the right thing. Because what goes around comes around."
Alarcon acknowledged that the law doesn't require any changes from banks — but it does give lawmakers and residents information to lobby for further regulation if necessary. He referred to JPMorgan's recent hedge-fund scandal in encouraging activists to be vigilant.
"If you believe we shouldn't be depositing in an organization that loses $2 billion in hedge funds, you need to scream about that."