L.A. Should Vote Down New Bureaucracy to Regulate Banks

Gary Toebben
President & CEO of the Los Angeles Area Chamber of Commerce

When the Los Angeles Area Chamber of Commerce sponsored ACCESS L.A. City Hall last Wednesday, we had one message that resonated throughout the morning — JOBS. We presented the City Council with a list of eight things they can do to create jobs, stimulate the economy and improve the quality of life for thousands of Angelenos. We also provided them with the 2011 Los Angeles City Council District Report showing economic indicators in each of their districts.

The response from the City Council was very positive and we left feeling hopeful as Councilmembers opined that the business community’s message was heard loud and clear. There was a strong commitment to eliminate the devastating unemployment faced in Los Angeles by reducing red tape and supporting projects that enable businesses to hire more employees. But that was in the morning.

Later that afternoon, seven Councilmembers signed a resolution that dashed the good intent showed earlier. The three-page resolution made a strong statement about the valid frustration felt by all Americans during the economic crises and voiced support for the demonstrators camped outside City Hall. If only the resolution had stopped there. But it didn’t. The resolution went on to urge the full City Council to hear a proposed banking regulatory ordinance by Friday, Oct. 28.

If your first thought was “I thought the state and federal governments regulated banks?” you would be right. But several members of the City Council think the City has the expertise, money and time to do it better. They have proposed an ordinance to evaluate and rank banks that submit proposals to do business with the City based on a new set of criteria that violate state law.

The stated goal of the new banking ordinance is to reduce foreclosures in Los Angeles. But what the ordinance will do is create a new city bureaucracy that taxpayers cannot afford; assign already burdened City staff with collecting reporting documents they do not have time or expertise to review; evaluate banking services with criteria that violate state law.

Here is what the proposed banking ordinance will not do: prevent one single foreclosure.

The federal government oversees a heavily regulated banking industry. Instead of looking for ways to spend City resources on a task the federal government is responsible for doing, we suggest the City Council and staff concentrate on facilitating private sector job creation. Having a job is the first step to gaining and maintaining home ownership.

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