Move your money
City of LA links banking relationships to community support
- Source: Report of the Chief Legislative Assistant BANKING AND FINANCIAL SERVICE CONTRACTS REPORTING REQUIREMENTS ON COMMUNITY INVESTMENT City of Los Angeles, December 14, 2009
Motion (Alarcon-Garcetti, et al.) (CF 09-0234) described the difficulties facing Los Angeles residents whose homes are in jeopardy of foreclosure, and discussed the need to support foreclosure prevention efforts. The Motion instructed staff to explore the potential to divest all ofthe City's deposits in banking and other financial institutions that are not cooperating with those prevention efforts. The Jobs & Business Development Committee subsequently refined and expanded the purpose of the Motion to ensure that the City's deposits and portfolio are invested in financial institutions that, in turn, reinvest in and benefit Los Angeles residents.
In this report, the CLA offers recommendations to improve reporting requirements for banking institutions that provide services to the City, to determine their current level of effort towards those goals. The CLA's recommendations include a proposal, patterned after a provision in Philadelphia law, to allow the City Treasurer to enforce the new reporting requirements. The CLA further recommends that the City Treasurer include two provisions in the next RFP/RFQ for banking services to ensure that the selected service providers are conducting business consistent with the City's priorities, within the restrictions of federal, state and local law.
Lastly, the CLA further recommends that companies that have displayed a pattern of discriminatory or other illegal credit practices, or have committed past criminal or civil violations that have resulted in significant harm to the City, should be precluded from future City contracts.
The CLA report notes that the Boards of the Los Angeles City Employees Retirement System, and the Fire and Police Pension System, have constitutional authority over the assets of the respective systems' investment portfolios. The Council may encourage, but not mandate, the investment of each plans' assets towards certain goals. Based on data provided by LACERS and Pensions, both systems appear to have begun the process of investing in a manner consistent with the Committee's intent. The CLA proposes a draft policy statement for the Council to endorse in order to offer guidance on the investments by LACERS, Pensions, and the City Treasurer.
1. Instruct the City Attorney to prepare and present an ordinance, summarized below and detailed in this report, to incorporate the following provisions into the City's Standard Provisions for City Contracts:
A. All banks and financial institutions that provide banking and financial services to the City shall be required to annually provide to the City Treasurer a statement of community reinvestment goals. B. The City Treasurer shall have the authority to restrict or terminate financial relationships with those institutions that fail to comply with these new reporting requirements, in a manner consistent with federal, state, and local laws. C. All banks and financial institutions that provide banking and financial services to the City shall notify the City at least 90 days prior to closing any bank branches within the City of Los Angeles. D. No contracts for financial or banking services shall be awarded to any bank or financial institution that has exhibited a pattern of discriminatory or other illegal credit practices, or has committed past criminal or civil violations that have resulted in significant harm to the City of Los Angeles' financial interests.
2. Request that the City Treasurer include in the next RFP/RFQ for banking services a provision that would provide additional bid preference, consistent with current law, to those respondents that provide evidence of active community investment practices beyond traditional banking services. 3. Request that the Board of Commissioners of LACERS and the Pensions Board, and the City Treasurer, establish an investment floor by committing that at least 25% of the City's portfolio will be invested in financial institutions that provide evidence of active community investment practices in businesses and residences within the City of Los Angeles, or that support socially responsible activities such as green technology, low/moderate income housing, and community redevelopment, to be achieved in a manner consistent with the fiduciary responsibilities established in federal, state, and local law.
- JOBS AND BUSINESS DEVELOPMENT COMMITTEE REPORT relative to the potential divestiture of all deposits in banking and other financial institutions that fail to cooperate with foreclosure prevention efforts. March 1, 2010
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