City councils in the nation’s two largest cities have approved laws aimed at forcing banks to invest more in their local communities. The Los Angeles city council unanimously passed its “responsible banking” ordinance yesterday afternoon; the New York’s city council passed its own shortly after by a vote of 44-4.
The laws were supported and pushed by activists from the 99 Percent Movement and religious groups who have led campaigns to move money from the nation’s largest banks. The ordinances give preference for city contracts to banks that make the most substantial investments in the local community through small business loans, home loans, foreclosure prevention, and other programs, according to the PICO National Network, a coalition of religious organizations that pushed for the Los Angeles ordinance:
The New York City ordinance would require banks to provide information on reinvestment activities, including foreclosure and loan modification information, that would be used to evaluate the banks that want to hold city deposits. The Los Angeles ordinance will gather data on banks’ participation in foreclosure prevention and home loan principal reduction programs, as well as other community reinvestment information.
New York Mayor Michael Bloomberg is likely to veto his city’s ordinance, another poke at 99 Percent Movement activists who have butted heads with him over the last eight months. Los Angeles Mayor Antonio Villaraigosa is expected to sign his city’s version into law.
Cleveland became the first major city to adopt a responsible banking ordinance in 1991, and they have spread quickly since the 99 Percent Movement ignited last fall. Pittsburgh and San Diego recently passed similar ordinances, and city councils in Seattle, Boston, and San Francisco are all considering laws now.