A broad coalition of elected officials, local residents and community leaders are encouraging the Los Angeles City Council to require that any bank it does business with not engage in the kinds of unethical practices that helped mire the city’s current bank, Wells Fargo, in scandal. The San Francisco-based financial services giant has been rocked by revelations that its employees created as many as 3.5 million accounts nationwide without customers’ knowledge or consent. With a payroll services contract between the city and Wells Fargo about to expire, activists see this as the best opportunity in decades to demand accountability from any bank that contracts with L.A.
On August 17, the L.A. Community Review Board on Responsible Banking met at Gilead Missionary Baptist Church in South Los Angeles to examine ways to implement responsible banking practices that might help restore residents’ confidence in who the city banks with.
“The city does not have to do business with banks that hurt workers and customers in our communities,” U.S. Representative Maxine Waters told the panel and audience members.
Next week the City Council’s Budget and Finance Committee may consider adding new language to the Responsible Banking Ordinance, which the council passed in 2012 but never officially implemented. Addressing issues stemming from the 2008 financial crisis, the 2012 RBO included language for disclosure, and an annual ranking report that the city could use to give more business to a responsible bank, or take business away from an irresponsible bank.
Defining “responsible” and “values-based” is contentious, and advocates say they have been pushing for the strongest language possible to define these terms in the RBO’s new version. And they want that language to be part of the request for proposal (RFP) for all banking services. The final RFP for the city’s payroll services is expected to be released in December or January. The language in the RBO would also cover banking services, including investments and bonds/underwriting when those contracts are up for review.
“Our point of leverage is during the RFP selection process, which is right now,” says Maria Loya, Los Angeles Policy Director with the Committee for Better Banks, one of the lead organizations pushing for new ordinance language.
“The city has never submitted a ranking report card since 2012,” Loya said, echoing fears of many advocates that the city might be reluctant to hold its banking partners accountable.