Community Development Bank

President Clinton announced a scaled-back community-development bank initiative Thursday that would distribute $382 million over four years among lending institutions serving distressed urban and rural areas. Clinton said the plan, a central feature of the Administration's prescription for South-Central Los Angeles and other troubled regions, "will bring new life and new opportunity and new directions" to impoverished and credit-needy areas.

Now that the Los Angeles Community Development Bank has gone belly up, we can say, we told you so. "The most obvious problem," we wrote in a 1994 article, "is that it is unlikely that officials of community development banks will have incentives or be able to identify the most productive investments." We argued that private entrepreneurs are better at picking productive, job-creating opportunities than are public officials or their representatives.

A senior executive from San Marino-based East West Bank has been selected to head the federally funded Los Angeles Community Development Bank, bringing commercial lending savvy to the helm of an institution beleaguered by a tough mandate and bruised portfolio. Community bank officials announced late Thursday that William H. Chu, senior vice president and director of retail banking at the $2.1-billion East West Bank, will assume the post of president and chief executive next month.

The City Council approved a plan Friday to phase the troubled Los Angeles Community Development Bank out of existence, while granting the bank access to $1.4 million to keep it operating for the next six months. More than a third of that is slated for Zone Ventures, a venture capital firm that has already received a controversial $29 million in investments from the federally funded bank.

The Los Angeles City Council on Thursday gave its unanimous blessing to a proposal to use federal grants and loan guarantees for a pioneering community development bank aimed at bringing in new jobs and boosting the economies of the city's poorest neighborhoods. In signing off on the application to be submitted today to the U.S.

In its largest loan to date, the Los Angeles Community Development Bank has committed $8 million to help a Latino-owned office furniture manufacturer buy the 21-acre downtown Los Angeles complex of U.S. Foodservice, formerly Rykoff-Sexton. The group of aging buildings at 7th and Alameda streets contains nearly 1.5 million square feet of space, the largest industrial real estate transaction this year, said Ron Bagel, president of Donaty Group, one of the brokers.

Los Angeles is in the final stages of creating one of the most significant economic development programs our city has ever seen--the Los Angeles Community Development Bank. This bank will invest more than $1 billion over the next decade, infusing real working capital into job-creating enterprises in our city's low- and moderate-income areas.

Inner city entrepreneurs bemoan the difficulty of accessing capital needed to modernize and expand their business to become more competitive, and the Community Development Bank is a sign of hope. But their suspicion about promised government aid will only be overcome if the "community" bank includes them in a plan that is effective, fair and responsible.

The Los Angeles City Council asked city officials Tuesday to review the L.A. Community Development Bank's investments in high-tech start-ups, after The Times reported that the $35-million program has yielded few benefits for the low-income communities the federally funded bank was created to serve.

Vice President Al Gore is set to announce today the award of more than $400 million to capitalize an innovative nonprofit community development bank created as part of a consolation prize for Los Angeles after it was passed over for designation as a federal "empowerment zone."

The city of Los Angeles could be forced to repay millions of dollars to the federal government because the Los Angeles Community Development Bank failed to meet performance goals, city officials said. The bank, overseen by the city, was funded by the federal Department of Housing and Urban Development to revitalize impoverished neighborhoods. In return for funding, the bank was required to create jobs for residents in target neighborhoods.

The City Council is stepping up pressure on the Los Angeles Community Development Bank, giving officials two months to craft a comprehensive plan to create jobs for residents of low-income neighborhoods or face a loss of funding. The action comes amid increasing concerns by city officials that the bank--chartered to spur employment by financing business in blighted pockets--has been ineffective.

The Los Angeles City Council asked city officials Tuesday to review the L.A. Community Development Bank's investments in high-tech start-ups, after The Times reported that the $35-million program has yielded few benefits for the low-income communities the federally funded bank was created to serve.

In the dawning days of dot-com riches, the investment looked too good to pass up. The federally funded Los Angeles Community Development Bank, burdened with debt and looking to generate revenue, would pump millions of dollars in venture capital into Internet start-ups. The investments were never likely to meet the bank's core mandate to create jobs in blighted neighborhoods, officials now acknowledge.

In a last-ditch effort to remake itself, the Los Angeles Community Development Bank is proposing to launch a privately funded investment group that would seek out new borrowers in distressed communities. By drawing on private investment--a minimum of $2 million per participant--the bank hopes to create greater accountability that would result in stronger deals.

The people of Los Angeles and their responsible leaders deserve a dose of truth regarding their Los Angeles Community Development Bank and its board of directors. The published statements of William Chu ["L.A. Community Development Bank Halves Staff," July 12] to the effect that the bank is "working every day with Mr. Lewin" and suggesting that the bank is negotiating in "good faith" are not only blatantly false, but also appear to be designed to focus responsibility away from the board of directors and onto other persons.

Directors of the emerging Los Angeles Community Development Bank, under pressure to open the doors of the massive jobs-stimulating institution, on Tuesday will announce the hiring of a veteran community and economic development leader as the bank's first chief executive. The selection of C. Robert Kemp as chief executive officer comes nearly 1 1/2 years after Los Angeles officials and the Clinton administration set out to boost the economies of the city's poorest neighborhoods.

The beleaguered Los Angeles Community Development Bank has laid off half its staff and pared operations, the first steps in the radical restructuring it must undergo if it is to survive. The bank's financial crisis could worsen at the end of the week if settlement negotiations with a former borrower aren't resolved. The borrower, attempting to collect on a $9-million judgment, has had the bank's main operating account frozen, raising the possibility the bank will fail to make its payroll Friday.

The Los Angeles Community Development Bank, the centerpiece of city efforts to revitalize depressed communities, could be forced to close if a radical restructuring now underway fails, according to a government report and city officials. The federal government's largest response to the 1992 riots, the bank has suffered a series of setbacks to its goal of channeling loans to businesses rejected by conventional lenders in the city's most blighted pockets.