L.A. considers stricter banking rules in wake of Wells Fargo scandal

A Los Angeles City Council committee is scheduled today to examine a plan to tighten up rules on banks that want to do business with the city as a response to the Wells Fargo fake accounts scandal.

The City Council approved a motion in November that would amend the city’s Responsible Banking Investment Monitoring Ordinance to require that banks doing business with the city adhere to responsible banking practices,including not setting “predatory sales goals.”

The Responsible Banking Ordinance was created in 2012 and requires banks doing business with the city to disclose information on loans and foreclosure activity. A draft version of the ordinance amendment presented in May by the office of City Atty. Mike Feuer and set to be discussed by the Budget and Finance Committee includes a number of changes but does not specifically include any banning of sales quotas or any mention of sales practices.

A coalition of advocates called the Los Angeles Community Review Board on Responsible Banking has been pushing for the more stringent language banning predatory sales goals to be reinserted into the ordinance.

The draft ordinance does require banks to disclose their Community Reinvestment Act score, which tracks a bank’s level of lending, investments and services in low- and moderate-income neighborhoods. Wells Fargo’s score took a significant hit after the fake accounts scandal. The draft ordinance also requires a bank to disclose any recent regulatory action taken against it, that it have whistle-blower protections,and that it certify that it is in compliance with all applicable consumer financial protection laws.