L.A. Community Bank Is Given Ultimatum
The Los Angeles Community Development Bank, created after the 1992 riots to fund businesses in depressed areas of L.A., has 18 months to become self-sufficient or it will be shut down, the City Council decided Tuesday.
The bank, the largest community lending experiment in the country’s history, has been racked by bad investments, risky loans, poor management, lawsuits and accusations that it misdirected federal money intended for businesses in the bank’s service area, which includes parts of central, east and South-Central Los Angeles as well as Pacoima.
On Tuesday, council members approved a plan from the city’s Community Development Department and the bank that aims to improve the bank’s financial condition, focus more tightly on creating jobs in the target area and minimize the city’s liability if an upcoming audit by the inspector general of the U.S. Department of Housing and Urban Development determines that the bank used federal money improperly.
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