Officials Mute on the Mergers That Ate L.A.

Marcel Marceau will speak during a live performance before any elected official in Los Angeles speaks out against the wave of predatory mergers wracking the Southland, a “corporate imperialism” that is rotting the core of the Los Angeles economy.

Since 1991, Los Angeles has lost every one of its corporate banking headquarters to raiders from the Pacific Northwest, including Security Pacific, First Interstate, Great Western, Golden State and Cal Fed. With both Glendale Federal and Home Savings about to exit, the Southland has become a banking colony of San Francisco and Seattle.

It’s not just the loss of tens of thousands of jobs that these bank mergers have cost Los Angeles. The jobs provided by corporate headquarters are high-paying ones that contribute mightily to the tax base. These positions also provide the greatest stimulus to additional job creation in the broader economy. Moreover, one of the great benefits of corporate headquarters is the charitable contributions and other resources they bring. Just ask anybody in Glendale about the substantial support Glendale Savings has given since 1934 for everything from the city’s symphony to its community college.

Of course, if consumers were to benefit from any of these mergers, the loss of jobs and corporate support might be worth the trade-off. But the history of bank mergers is a tawdry one of higher loan costs, lower passbook rates, more fees and an impersonal imperiousness.

Unfortunately, it’s not just the banking industry that has taken a heavy blow here. Since the 1980s, the number of supermarket chains has shrunk from 20 to five. Indeed, the latest acquisition--the gobbling up of the locally based Ralphs and Hughes Family Markets by yet another Pacific Northwest behemoth, the Fred Meyer chain, has an eerie resemblance to L.A.’s banking debacle. With only a few major chains left, the food consumer will become a pawn in a game of “divvy up the territory.” In some neighborhoods, Ralphs will corner the market. In other neighborhoods, it will be Von’s. Still others, it might be Albertson’s.

Now here’s the game: Through a “tacit collusion” symptomatic of industries with only a few players, the executives at these big chains will choose to guard their own turf rather than try to cut prices and invade the turf of their rivals. That means more profits for all of them. It also means you’ll pay more at the checkout stand.

Which brings me to a third set of pernicious mergers, those in aerospace. In the latest, Maryland-based Lockheed Martin is trying to acquire the Los Angeles-based Northrop Grumman. At stake is the certain loss of yet another corporate headquarters, Northrop’s in Century City, and 15,000 high-paying jobs at Northrop facilities.

Meanwhile, just last week another Pacific Northwest behemoth, Boeing, solemnly announced that while its actions will have no impact on jobs in Seattle, it will slash 6,000 jobs in the Southland. This is in the wake of its coupling with McDonnell Douglas, which has substantial operations in Long Beach.

The bottom line is that most mergers affecting the Southland are not mergers but acquisitions of Los Angeles-based corporations by outside corporate raiders. The danger is that Los Angeles will become nothing more than a large labor pool with a smaller tax base. It will be a region populated by low- and middle-income wage earners whose labor disproportionately benefits the upper crust of corporate America inhabiting the suites of San Francisco, Seattle and beyond.

This need not be the case if our officials would begin to flex some of their political and economic muscles. In the case of the banking industry, city and county governments could refuse to do business with any bank that does not maintain a corporate presence here. By the same token, officials could use their legal rights to intervene in the merger proceedings to oppose acquisitions such as the Fred Meyer-Ralphs-Hughes blockbuster on anti-competitive grounds.

As for the Lockheed-Northrop deal and the impending Boeing cuts, why can’t Mayor Richard Riordan and Rep. Henry A. Waxman (D-Los Angeles) or Sen. Barbara Boxer (D-Calif.) use their clout to ensure that our tax and defense dollars stay here?

These are economic matters that should be of great concern to elected officials in the Southland, but as with Marcel Marceau, the silence is deafening.