For Immediate Release: Thursday, September 21, 2017
Contact: Sarah Ford, Sarah.Ford@berlinrosen.com, (812) 243-7152
Peter Kuhns, email@example.com, (213) 272-1141
NEW REPORT: Experts Offer Blueprint to Enact Responsible Banking Policy in L.A., Call on City Council to Do Their Part
Banking experts and consumer advocates recommend City Council end the delay and pass proposed legislation to strengthen city banking
LOS ANGELES – A year after the Wells Fargo accounts scandal first broke, the Los Angeles Community Review Board on Responsible Banking released their findings and recommendations to reform the city’s banking system. The review board, compromised of leading academics, labor representatives, consumer advocates and financial industry experts, held a public hearing opened by Rep. Maxine Waters last month. Through its investigation and public testimony, the review board recommends Los Angeles City Council take immediate action to end predatory practices like high-pressure sales goals with any bank that does business with the city and take broader action to implement safe banking policy solutions.
“Los Angeles city officials have the responsibility of defining and protecting responsible banking for residents,” said Jennifer Epps-Addison, President and Co-Executive Director of the Center for Popular Democracy. “More importantly, however, they have the responsibility of acting when the needs of taxpayers and constituents are not being met. Los Angeles faces an unprecedented opportunity to formally write responsible banking into the fabric of the city’s code of contracting. But unless the city’s leaders move to amend the Responsible Banking Ordinance and enact the principles outlined in this report, the financial health of Los Angeles will continue to suffer.”
The review board’s findings and recommendations come as the Budget and Finance Committee begins hearings on Monday to amend the Responsible Banking Ordinance, first adopted in 2012 to address issues stemming from the financial crisis. With support from groups like the Committee for Better Banks and the Alliance of Californians for Community Empowerment, the amendment would update Los Angeles’s five-year master banking request for proposals to require that banks “do not base evaluation, promotion, discipline, or compensation of any employee on individual-level or branch-level sales of consumer financial products or services.” However, some in City Council are pushing to delay the ordinance improvements and release an RFP that does not include these overdue measures, jeopardizing an opportunity to free Los Angeles of sales goals and other harmful banking practices that have long allowed big banks to thrive at the cost of residents’ economic security.
“Opponents of banking reform argue that holding banks accountable to responsible practices within city banking will make it less likely that they will do business in Los Angeles,” said Peter Dreier, Chair of the Occidental College’s Urban & Environmental Policy Department. “But that just isn’t the case. Cities like New York, Pittsburgh, St. Paul, and Seattle have such laws and banks continue to bid for city contracts and business. We must hold Los Angeles to the same standards to end practices that harm our communities.”
Through its investigation, the Review Board weighed the evolution of banking in Los Angeles, the outsized impact on communities of color, and the need for input from bank workers and consumers when forming banking policy and reforms. The review board’s full recommendations include:
- Giving preference for city contracts to banks that:
- Base metrics on collective customer service goals, rather than sales or individual performance;
- Do not use sales performance as a factor in discipline or termination;
- Require that employees receive adequate wages that do not rely on incentive pay as the majority factor in overall compensation;
- Establishing a transparent and regular process for enforcing and updating the RBO given the evolving nature of banking practices that can harm our economic security;
- Supporting organizations of bank workers who are taking steps to improve the banking industry;
- Creating a Responsible Investment Ordinance that promotes strong environmental, social and governance principles; and
- Developing an annual report card process to help consumers, city officials and taxpayers make informed decisions about the banks they choose to use and invest in.
The Community Review Board also discussed the potential benefits of a public municipal bank, recommending a city-run bank as a way of providing quality financial services to the city and its residents in a more sustainable way than those provided by the large banks that currently receive the vast majority of city business.
At the August convening, dozens of Los Angeles residents testified to discriminatory practices that target low-income and communities of color, low-wage workers and seniors by manipulating terms of mortgage loans and pushing longstanding community members out of their homes, denying loan modifications to low-income borrowers, enforcing stricter sales goals at bank branches located in communities of color or investing in fossil fuels at peril to indigenous communities and the environment.
Testimony to the review board from Los Angeles banking customers, workers, and advocates made clear the need for an open and transparent process in reforming banking standards, both in the banks internal policies and in the city’s legislative priorities. For bank workers, who blew the whistle on Wells Fargo’s dangerous sales culture, that means a voice on the job to further improve the banking industry and protect customers, fair wages, and sales goals based on customer service not sales.
Ruth Landaverde, a former Wells Fargo and Bank of America worker who testified before the review board, said, “The city of Los Angeles should set an example and hold banks accountable by choosing not to do business with any bank that has sales goals for its workers, and cut the contract of any bank that is defrauding the community—and they must do it now by passing the Responsible Banking Ordinance amendment.”
The full report by the Los Angeles Community Review Board on Responsible Banking, including appendices of testimony from Los Angeles bank workers, customers and community members, can be found HERE.