Alarcón's Report Card Proposal Moves Closer to Becoming LawRichard Alarcón's proposed ordinance requiring financial institutions to submit local investment “report cards” about how socially responsible and committed to the local economy they are has been drafted and is one step close to becoming law. The ordinance is to be presented to the City Council within 45 days.
Currently, the City of Los Angeles has nearly $30 billion in investments, including savings and pension funds.
A source close to the councilman's recently confirmed to RepublicOfL.A. that he has had conversations with Arianna Huffington about her online newspaper, The Huffington Post's so-called "Move Your Money" campaign, encouraging people and institutions to abandon large banks in favor of smaller, community banks and credit unions.
However, the source made clear that Councilman Alarcón's proposed investment report card law is not an outgrowth of that movement.
“The City of Los Angeles has an obligation to ensure that not only are our taxpayers dollars spent properly, but that they are also invested in a way that gives the greatest benefit to our City, and the report card created by the Responsible Banking Initiative will give us the information we need so we can invest smarter,” said Councilman Alarcón.
The councilman said even better interest rates are not enough for the city give business to institutions that under serve the community.
"A slightly lower interest rate isn’t much of a deal, if the same bank is taking advantage of homeowners, refusing to issue small business loans or not opening branches or ATMs in low-income areas.”
Alarcón was joined by colleagues on the council who share the belief that the city's investment portfolio should be placed with financial firms that demonstrate a commitment to the city's residents and businesses.
“...This ordinance will put the City in a position to have a more meaningful relationship and ensure the banking industry is a partner in not only the investment aspect, but also the community benefit," said Councilman Bernard Parks.
Alarcón will be presenting the Responsible Banking Initiative to leaders of other cities during next week’s National League of Cities meeting.
Interestingly, a statement issued by Alarcón's office referenced the use of a "national model to promote investment in banks that are operating in a socially responsible manner, including investing back into local communities and providing much needed services to residents, especially those in lower-income areas."
As mentioned, there is a national movement afoot already: Huffington's "Move Your Money" campaign, which state legislators in New Mexico have attempted to do in recent weeks. It looks like L.A. is next.
While Los Angeles would be the biggest City to create comprehensive reporting requirements for banks wanting to do business with the City, it is not without precedent. In 2006, the Philadelphia City Council unanimously approved a law requiring all banks that do business with the City fill out a Statement of Community Reinvestment Goals within Philadelphia. This year, five states have introduced bills to look at how State deposits can be used to ensure reinvestment within their State.