[GPSCC-chat] [Fwd: [Alt-Media] Cities and states have the power to drive financial reform]

[Gerry Gras]

FYI,

Gerry


-------- Original Message --------
Subject: [Alt-Media] Cities and states have the power to drive financial	reform
Date: Mon, 21 Jun 2010 22:43:01 -0700
From: "Alt-Media: News and views from an alternative perspective"	<alt-media at cagreens.org>
Reply-To: alt-media-owner at cagreens.org
To: alt-media at cagreens.org


Financial Reform: The Collective Power of Local Government vs. Big Banks

By Richard Alarcón

(Huffington Post, May 24) -- Across the U.S., newspaper headlines lead 
with stories about financial reform. Congress wants to better regulate 
Wall Street and take on the Big Banking fat cats, with their golden 
parachutes and big bonuses, who got us into this mess in the first 
place, and then took our hard-earned tax dollars in the form of a 
federal bail-out.

	Congress is right to take on the big banks -- reform at the national 
level is long overdue and obviously needed. But amidst the national 
overhaul, the seeds of reform -- the work done at the state and local 
level -- cannot be overlooked or superseded.

	True reform of our banking and financial systems will take pressure and 
action at every level, and across the nation.

	Americans are fed up with billionaires bilking us for all we are worth -- 
and making the middle class the biggest losers in the process. Our 
friends and neighbors have lost their homes, as well as the pensions or 
retirement savings they worked for their whole lives, and are struggling 
to find work in the worst economy of our lifetimes.

	In the meantime, Wall Street is back to business as usual, posting new 
profits, while those on the other side of the deals have lost their 
homes, their jobs, and their retirement savings.

	With all of the anger and distrust of Wall Street, we have hit a place 
where we are ready for a basic cultural shift -- from looking at our 
investments and banking solely on the basis of short-term profits, to 
using it to produce true, long-term growth by investing our funds in 
economic growth opportunities that directly impact our communities.

	We cannot let this historic opportunity pass us by. We must channel our 
inner Howard Beale and scream from our windows, "I'm mad as hell, and 
I'm not going to take it anymore". Our outrage must be heard, not just 
in words but in action.

	At the city level, this cultural shift means investing our money in banks 
that help Main Street grow by offering small business loans, working 
with homeowners facing foreclosure to renegotiate mortgages, and opening 
up bank branches and credit in under-served areas, by creating local 
versions of the Community Reinvestment Act standards.

	After all, what good does it do Los Angeles if the banks in which the 
bulk of our tax dollars sit are investing that money in another city, 
far away? That's why the Los Angeles City Council unanimously supported 
my proposal to create Responsible Banking Standards in Los Angeles, 
based on a model that Philadelphia put in place in 2002.

	Los Angeles alone has a cash and pension portfolio of over $25 billion, 
which allows us to leverage these investments in such a way to benefit 
the residents of our city -- not just through the rate of return, but by 
looking at how the banks and financial institutions invest in our community.

	The ordinance will require that any bank looking to do business with Los 
Angeles would have to submit a report to the City Treasurer who, in 
turn, would grade the banks based on their investments in Los Angeles.

	And we're not the only ones -- cities including Boston, Carson City, 
Charlotte, Dallas, Denver, Independence, Muskegon, and Watsonville are 
all looking into creating similar standards for Responsible Banking. 
Just this week, Boston City Councilor Felix Arroyo is hosting a hearing 
to examine how to hold big banks accountable in their city.

	The states of California, Massachusetts, Minnesota, New Mexico, Ohio and 
Washington are also all considering or have implemented sweeping 
financial reforms, including looking at the creation of state-run banks 
or investing only in state-chartered banks.

	The anger is papalpablepable, and the time for reform is now. We've lost 
our trust in the banks that took our bail-out money, and let hundreds of 
thousands of homes fall into foreclosure.

	We've lost our trust in Wall Street, where companies gained enormous 
profits, betting on the demise of investments. We've lost trust in the 
rating agencies, when 93% of the subprime-mortgage-backed securities 
issued in 2006 had AAA ratings -- and are now "junk" status.

	The only way that trust is going to be restored is with sweeping reform. 
That's why Congress must pass substantive financial reform, so that 
Americans can begin to believe again. But at the same time, economic 
reform -- just as powerful -- must come from the cities and states. 
Collectively, our leverage is enormous.

	I introduced a resolution at the National League of Cities in support of 
local reform, because I know the power we could have if we banded 
together. Local and state officials know the pain of our constituents, 
and know the benefit that can be derived from holding banks and 
financial institutions more accountable.

	The notion that we can create real change is not just pie in the sky. The 
city of Philadelphia has had their policy in place since 2002, which has 
resulted in increased consumer and small business lending to 
historically under-served areas of that city.

	And on April 16, Massachusetts State Treasurer Timothy Cahill announced 
that the state government will begin divesting $243 million in taxpayer 
dollars from three of the nation's largest banks -- Bank of America, 
Citibank, and Wells Fargo.

	The decision came after the banks were asked, and refused, to voluntarily 
comply with an 18% interest rate cap on credit cards and other consumer 
borrowing for Massachusetts residents. The cap, which is required of all 
Massachusetts state-chartered banks, does not apply to 
federally-chartered banks.

	These actions are just the beginning of our cultural shift. More cities 
and states are needed to create real pressure on the banks. I urge every 
city to create standards for how taxpayer dollars are invested and find 
ways to ensure that the dollars are going to banks and financial 
institutions that are behaving well.

	Shouting may not get what we want -- but you can bet that billions of 
dollars taken elsewhere will get banks' attention. We're mad as hell -- 
and we don't have to take it any more.

-----------------------

Richard Alarcón is a member of the Los Angeles City Council.

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