More evidence of the effectiveness of the growing protest movement is the recent enacted of “responsible banking ordinances” in several cities, including Los Angeles and New York. On Tuesday, May 15, the LA City Council voted 13-0 to require any commercial bank wishing to hold city deposits to submit an annual statement of community reinvestment activity in the city, including the number, size and type of small business loans, home mortgages, home improvement loans, community development loans, and banks’ participation in the City’s foreclosure prevention and home loan principal reduction programs. Activist groups can use the information to develop a “report card” on banks that could push the city government, unions, churches, foundations and others to remove their deposits from banks with poor grades. A year ago, the proposal, sponsored by City Council member Richard Alarcon, died on the vine for lack of support. But this year, in the wake of the Occupy movement, Alarcon resurrected the ordinance, which quickly gained momentum, despite the opposition of LA’s banks and business community. The grassroots campaign for the ordinance was led by LA Voice, POWER, SEIU, and the Alliance of Californians for Community Empowerment (ACCE).
Other major cities, including Boston, Oakland, Austin, Portland, Kansas City, and Seattle, are now reviewing “responsible banking” laws, which allow cities to use their leverage as large depositors to hold big banks publicly accountable for their reinvestment in neighborhoods, especially in low to moderate-income neighborhoods of color, where predatory lending and bad business practices by big banks have devastated communities’ small businesses and homes. Cleveland has had a similar law for almost two decades.
The same week, the Oakland (California) City Council stood up to lobbyists from the Mortgage Bankers Association and the Chamber of Commerce and voted to expand Vacant Property Registration & Foreclosure Blight Ordinance, which will make banks pay when then foreclosure on properties and don’t clean them up. In San Jose, the City Council passed aPayday Lending Ordinance, which imposes a cap on the number of current payday lenders (which typically charge rip-off fees to cash checks) and the first to prevent payday lending businesses from opening in or near very low-income areas in the city.