CommentsELECTION--Charter Amendment B would allow Los Angeles to pursue the option of a public bank.
But even voters who support the concept of a public bank should oppose this Charter Amendment unless and until a well-thought-out plan for such a bank addressing all concerns to everyone’s satisfaction is in place.
Rushing to open the door – even when everyone from the Mayor on down keeps saying It’s just a first step; all it does is allow the concept to move on to the next step – sets expectations and parameters that very well may not be in Angelenos’ best interest.
If approved, where do you think that next step will originate? With the City Council. And don’t you think that those who stand to profit from access to this huge pool of money won’t be working over our electeds for favors? This at the expense of the people of Los Angeles who deserve their streets paved, their firemen paid and their tax dollars kept safe from special interests.
The Neighborhood Council Budget Advocates – stakeholders elected by Neighborhood Councils to review and comment on the City’s budget and services – have serious concerns about what effect switching over to an uninsured financial institution that the City both owns and controls would have on the City’s finances.
They support the City Council’s Chief Legislative Analyst call for the City to retain experts “to recommend how the bank would be funded, identification of specific financial services to be offered by the bank, risk to the City’s financial position, and impacts on the City’s financial services, bond rating, and general city services,” noting that the consolidation of a significant amount of the City’s resources in the bank would increase the City’s risk exposure and the failure of the bank would be catastrophic.
Consideration of a public bank should begin with evaluating as broad a spectrum of options as possible before going to the people, especially given that it shares November’s ballot with two measures that are costing the taxpayers over $3 million to fix a drafting error in previous Charter Amendments.
The City must develop a comprehensive plan addressing a public bank’s strategy and management, its civil service employees, and its lending and credit policies, especially to politically-wired borrowers.
How much capital would the Bank require, and what is the source of that capital? More than likely, the money would be from the City’s cash-strapped budget, funded primarily by our tax dollars.
What would the impact be on revenue to City departments since the yield on bank deposits would be considerably less than the current yield on the City’s $9 billion investment pool? That shortfall alone has been estimated to be in the range of $100 million a year.
Can we trust a politically appointed Board of Commissioners to be independent? And what guarantee do we have that the City will actually seek further input from the citizenry before such a bank is established?
Any plan must also analyze the City’s risk profile, because deposits in an unrated Bank of Los Angeles would not be insured or collateralized by marketable securities.
The City owes Angelenos more comprehensive disclosures about their public bank proposal and its impact on the City’s budget and finances before any decisions are made – including amending the City Charter. There are just too many unanswered questions to justify voters presenting the City Council, a City Council which just passed a budget that failed to account for a billion dollars of projected expenses, with a blank check on the City’s treasury.
‘B’ does not deserve a passing grade. Vote ‘NO’.
(Liz Amsden is Co-Chair of the Budget Advocates and is a member of the Highland Park Neighborhood Council.)
-cw
