L.A. council OKs watered-down bank rules

Months after demonstrators with Occupy L.A. demanded an aggressive crackdown on Wall Street banks, the Los Angeles City Council approved a watered-down plan requiring regular reports on local lending and charitable giving from financial institutions that seek city business.

The council voted 13 to 0 to draft a law requiring those banks to disclose data on their foreclosures, small-business loans and other involvement in city neighborhoods.

But council members dropped plans to rate the banks after being warned by budget managers that such a move would be too expensive. They also tabled a proposal, offered months ago during the Occupy demonstrations outside City Hall, to sever ties with financial institutions found liable for wrongdoing.

City Administrative Officer Miguel Santana said last year that efforts to punish banks for criminal misdeeds could cost the city $58 million. Ranking such institutions on their community participation is not a “core mission” of a financially strapped city, he said.

“I think this is a fair compromise,” Santana said. “We were able to listen to the concerns of both the advocates and the financial institutions.”

That message did not entirely satisfy 41-year-old Cook Wayne, a musician who wanted the ordinance strengthened.

“The city is more or less influenced by the banks, rather than the other way around,” he said.

Councilman Richard Alarcon, who wrote the various bank initiatives, said he was not troubled by the compromise. Council members will use the reports to help decide whether the banks should receive future city contracts, he said.

“Just having access to that information is a tremendous leap forward,” he said.

Alarcon said the bank reports will also include criminal convictions and civil judgments.

Efforts to assess financial institutions based on their local activities have been in the works for years. But they gathered new momentum last fall during the Occupy L.A. encampment outside City Hall.

One business leader said she was ready to accept the council’s latest plan.

“It’s an imperfect compromise on an issue that frankly, we feel the city has no business dealing with at all,” said Carol Schatz, president and chief executive of the Central City Assn.

david.zahniser@latimes.com