A Los Angeles city councilman called Wednesday for his colleagues to explore ways of punishing banking giant JPMorgan Chase & Co. for engaging in financial misconduct, possibly by terminating the company's contracts with the city.
Councilman Gil Cedillo, with support from Council President Herb Wesson and Councilman Curren Price, introduced a motion that seeks to determine how much business the city's pension funds and other agencies have been doing with JPMorgan Chase. The proposal calls for the council's lawyers and financial analysts to provide legal options for severing the city's ties with the company.
Cedillo would not agree to an interview with The Times. His aides released a statement from the councilman, saying that JPMorgan Chase "targeted underserved communities and someone must hold them accountable."
"By taking a stand in LA, we are sending a signal to other municipal and state government entities around the country," he said in the statement. "If we want to make sure that banks like JP Morgan do not engage in such improper conduct in the future -- they need to realize there is potential to lose business here in the City of LA. “
Suzanne Ryan, spokeswoman for JPMorgan Chase, had no comment. Cedillo's proposal heads first to the council's Budget and Finance Committee before reaching the full 15-member council.
The city has already filed lawsuits accusing Wells Fargo & Co., Bank of America and Citigroup Inc. of engaging in a pattern of mortgage discrimination that led to a wave of foreclosures. In those cases, the city alleged those three companies saddled minorities with loans they couldn't afford, creating a disproportionately large share of foreclosures in those communities.
Cedillo's motion comes two months after JPMorgan Chase agreed to a $13-billion settlement with the federal government over its sale of shoddy mortgage investments. As part of that agreement, the company admitted that it knowingly peddled the toxic securities, which helped create a national housing bubble and bring about a major recession.
California Atty. Gen. Kamala D. Harris announced that the state reached its own $298-million settlement with JP Morgan over allegations that it gave the state's public employee pension funds incomplete information about its investments between 2004 and 2008.
Yet another agreement was announced last week, with the U.S. Department of Justice saying JPMorgan Chase would pay $2.6 billion for failing to raise flags about the Ponzi scheme carried out by convicted stockbroker Bernard Madoff. The bank said in a statement that it did not knowingly assist Madoff's scheme but "could have done a better job” of putting together various concerns about Madoff.