Community Bank’s Plan Rejected

The Los Angeles City Council on Tuesday rejected the Los Angeles Community Development Bank’s annual business plan, sparking a last-ditch round of negotiations to remake the troubled institution.

The council action triggers 60 days of formal talks between the federally funded bank and the city, which oversees it. The city staff then has 30 days to report back to the council.

The business plan lays out the budget for the quasi-private bank, which cannot operate without city approval. The bank was created in the aftermath of the 1992 riots to revitalize business in the city’s poorest pockets, but has fallen short of its mandate to create jobs for local residents.

The council voted without discussion to reject the plan. City officials said in a report that the bank’s plan didn’t do enough to correct the jobs problem. The report also said the plan did not address a funding shortfall that has crippled the bank’s ability to lend.

The council action Tuesday funded the bank for 90 days, allowing it to operate while its future is determined. If negotiations fail, the city will have the option of taking over or shutting down the bank.

But bank Chief Executive William Chu said he is optimistic a deal can be struck to keep the bank operating.

“This is a chance for the bank to formally sit down with the city,” he said. “It does not necessarily mean that it’s the end of the road.”