L.A. Adopts ‘Social Responsibility’ Rules for Banks Working With City

December 14, 2017 by · Leave a Comment 

The Los Angeles City Council Wednesday approved more stringent rules for banks that want to do business with the city, which could result in Los Angeles divesting its funds from Wells Fargo over its fake accounts scandal and support of the Dakota Access Pipeline.

“We all realize that banks have done such bad things that we couldn’t have written it if it were fiction, or imagined that companies would be creating phony bank accounts and checking accounts and making phony loans and doing all kinds of things without even letting the customer know,” Councilman Paul Koretz said.

The city’s efforts to change the rules for its banking partners was undertaken as a result of the Wells Fargo fake accounts scandal, in which 3.4 million accounts were fraudulently created by employees given aggressive sales goals, and its support of the controversial pipeline. The city does the majority of its banking with Wells Fargo through roughly 800 different accounts.

Some of the rules were approved immediately in a 14-0 vote that drafted new language for a request for proposals for banks, and others were included in a 12-0 vote that directs the city attorney to amend the city’s Responsible Banking Ordinance. The city attorney would need to make the changes to the ordinance, and the council would have to approve of the updated language in a future vote.

The approved rules include “social responsibility” factors in the RFP that will be weighed heavily when the city considers proposals from banks.

Councilman Paul Krekorian said at a recent Budget and Finance Committee meeting that “the weight of the social responsibility component” in the new rules would “exceed what has been done by any other city.”

Wells Fargo’s financial support of the controversial Dakota Access Pipeline was also cited in a council motion as motivation for the city to explore divesting its funds from the bank while outlining criteria and standards the city would have in any future agreements with financial institutions.

“It’s time for us to endeavor to only do business with ethical financial institutions that have high standards and ethical standards. This is a very fiscally sound approach to looking at what divestment will mean, and it’s a very complicated and intricate matter,” Councilman Mitch O’Farrell said in June when he co-introduced the motion with Koretz.

In response to the fake accounts scandal, some council members expressed a desire to ban banks the city does business with from having individual or branch-level sales goals, but the Budget and Finance Committee was told several times by city staff that banning banks from having sales goals would be too difficult to monitor and could eliminate all possible bidders.

“Disallowance of sales goals may result in no or limited eligible bidders qualified to provide the city’s general banking services,” according to a report from the Office of Finance.

The committee then shifted to the idea of requiring banks to disclose sales goals practices in their bids, and an amending motion that was approved as part of the vote on the Responsible Banking Ordinance included a request for the city attorney to include the requirement that banks disclose their branch-level or individual sales goals and if they would promote or fire an employee based on them.

“The disclosure would solve a lot of the problems, because if they had a set of sales goals that were not humanly possible in the normal course of business, we would be able to spot that relatively easily, so if you had Wells Fargo-style sales goals it would be pretty obvious that no one could meet those without engaging in inappropriate behavior,” Koretz said at a previous committee meeting.

The amendment was introduced by Councilwoman Nury Martinez.

“As city leaders, we must expect the highest level of financial and social responsibility from our banking and service providers. While the city is not a regulatory agency, our taxpayers deserve to know that they’re money is being handled the right way, by the right banks,” she said.

The new social responsibility score would include things like a bank’s Community Reinvestment Act score, which tracks its level of lending, investments and services in low- and moderate-income neighborhoods. Wells Fargo’s score took a significant hit due to the fake accounts scandal.

Under the new RFP guidelines, the first phase of a banking bid will focus on its financial and organizational capacity while giving it a total score up to 100. The second phase of scoring will include a possible 30 points for its social responsibility score on top of the first phase score, for a total possible score of 130.

The new rules in the RBO will also require that a bank disclose any recent regulatory action taken against it, and that it have whistleblower protections and certify that it is in compliance with all applicable consumer financial protection laws.

In a settlement last year stemming from the fake accounts scandal, Wells Fargo paid $50 million in civil penalties to the city of Los Angeles and $135 million to two federal agencies, and was ordered to provide restitution to affected customers.

The Dakota Access Pipeline that runs more than 1,100 miles from North Dakota to Illinois sparked a months-long protest near the Standing Rock Sioux Reservation. Members of the tribe opposed the project on grounds that it passed over a sacred burial ground and would threaten their water source.

Pipeline construction was halted in November 2016 by the Army Corps of Engineers, but President Donald Trump signed an executive order in January instructing the agency to finish the project. Oil has been flowing through the pipeline since March.

Wells Fargo executives said in a February statement that Wells Fargo is not the lead bank on the project but merely one of 17 financial institutions that made a loan to the developers of the pipeline. The company said it lent $120 million to the project.

June 29, 2017 by · Leave a Comment 

Members of the Los Angeles Department of Water and Power’s most powerful union will see a significant bump in pay, with the City Council’s approval Wednesday of a new contract for the International Brotherhood of Electrical Workers Local 18.

The deal was approved 11-3 despite three council members’ objections to the speed with which it came to the council for a vote, having skipped a committee hearing after the Board of Water and Power Commissioners approved the contract last week.

Councilmen Mitch O’Farrell, David Ryu and Mike Bonin, who cast the dissenting votes, said they felt the process lacked transparency.
“The approval of this plan without greater discussion, public outreach or deeper analysis undermines the public’s trust in their local government,” Ryu said.

Bonin said he learned the details of the deal and that it was coming to a vote though the media.

“I’m disturbed, as are a few others, by this process, and there is still information I feel I don’t have,” Bonin said.

Councilman Joe Buscaino, who ultimately voted for the deal, also said he learned of the contract details through the media.

“This process stunk. One cannot assume approval of a contract without proper vetting. We heard about this contract through a number of media reports.

In the five years I’ve been here through city contracts, my office and myself were at least briefed on what to expect,” Buscaino said.
The deal, which has the support of Mayor Eric Garcetti, continues the practice of union workers not contributing toward their health care costs — a benefit not enjoyed by all city workers.

The new contract has been criticized by some as being too generous — to the point that it could cause other city unions to ask for raises — as well as for being fast-tracked to a vote.

The contract gives six raises over five years for the IBEW Local 18’s 9,000 members at a total rate of about 13 percent to 22 percent, depending on the consumer price index. It also ends the union’s $4 million controversial annual contribution to two nonprofits, the Joint Training Institute and the Joint Safety Institute, which have been heavily criticized due to a lack of transparency as to how they were spending and tracking the money.

The contract will cost an estimated $56 million annually, but will not impact the city’s general fund as it will be funded via adjustments to the LADWP’s budget, according to an LADWP commission memo.

Fred Pickle, executive director of the LADWP’s Office of Public Accountability, said because the department routinely comes in under budget each year, the raises would not likely result in higher rates for customers.

When Garcetti ran for mayor in 2013, one of his chief issues was a promise to bring sweeping changes to the LADWP. That pledge made him an enemy of the IBEW, which spent $2 million supporting his opponent, then-City Controller Wendy Greuel. Once elected, Garcetti blocked the approval of a four-year contract with the IBEW so he could renegotiate a new deal that resulted in no raises for the union.

“Public unions are major donors to City Hall political campaigns, so perhaps it should be no surprise if elected officials are reluctant to drive a hard bargain. But this contract could sure use more analysis and public debate,” the Los Angeles Times Editorial Board wrote while also criticizing Garcetti for not driving a harder bargain this time around after his landslide re-election in March.

Interim Chief Administrative Officer Rich Llewellyn said the deal was not a template for future deals with other unions and contended the raises are needed to keep LADWP workers from leaving to work for other cities.

An audit of the LADWP released earlier this year by City Controller Ron Galperin found that the utility spends about $40 million a year on apprenticeship programs that only graduate about 51 percent or fewer of their enrollees, and that many of the graduates go to other utilities to get better salaries.

“This contract moves us in the direction of much-needed reforms, specifically ending ratepayer funding of the two nonprofit training institutes that I audited in 2015, and offering a retention incentive for certain workers who are expensive to train and frequently lured away by private utilities,” Galperin said. “At the same time, I’m not convinced that all of the across-the-board increases were justified by the need to attract and retain employees at the DWP. We must be watchful stewards of ratepayer money.”

Llewellyn said the elimination of the payment to the two institutes was a big win for the city.

When pressed by some council members as to why the city didn’t push harder on healthcare contributions, Llewellyn said, “We pushed on everything … We pushed on everyone, and they pushed back on everyone. And we ended up in the middle with what I believe is a reasonable deal.”

Councilman Calls for ‘Indigenous Peoples Day’

November 13, 2015 by · Leave a Comment 

A city councilman called today for the creation of an Indigenous Peoples Day in Los Angeles, but stopped short of saying he wants the holiday to replace Columbus Day.

Councilman Mitch O’Farrell, who is part Native American, introduced a motion today to look into setting aside a day each year to recognize the history, culture and achievements of indigenous peoples.

The holiday is part of a wider movement around the country to replace Columbus Day, which falls on the second Mondays of October, with a day focused on Native Americans instead. Columbus Day is a federal holiday observed in honor of Christopher Columbus, who is popularly credited with discovering the Americas. Critics of the holiday have pointed out that millions of people were already living on the American continents when he landed, and that his arrival eventually led to many of those people being enslaved or their populations thinned.

Berkeley, Denver, Seattle, Anchorage, Portland and Albuquerque have already stopped observing Columbus Day and replaced it with Indigenous Peoples Day, according to a release from O’Farrell’s office.

But O’Farrell told City News Service today that while he has made it “pretty clear I’m not a fan of Columbus Day,” he is “open to all options” for the timing of Indigenous Peoples Day in Los Angeles.

Speaking at a City Hall luncheon event celebrating Native American Heritage Month earlier today, O’Farrell called the observance of Columbus Day a “travesty,” while Native Americans have historically been “devalued.”

O’Farrell, whose father is Irish American and his mother a member of the Wyandotte Nation tribe, said he grew up hearing teachers describing Columbus as a “great man.” But over the years, it has become “less acceptable to really even mention his name in a positive light,” he said.

The reasons for wanting to establish Indigenous People’s Day “is based on the folly of celebrating a man who brought nothing but catastrophe for native peoples when he first arrived in the new world,” O’Farrell told City News Service.

While O’Farrell was strongly critical of Columbus Day, he would not say if he supports abolishing it in Los Angeles.

His motion only calls for the City Administrative Officer to report back on creating the holiday, and asks the Los Angeles Human Relations Commission to report on the “historical importance and cultural impact” of establishing a “legal city holiday” recognizing indigenous peoples, and does not suggest the annual observance day.

The idea of abolishing Columbus Day faces some resistance from O’Farrell’s colleagues. Councilman Joe Buscaino, who is Italian American, released a statement saying that for families like his, “who immigrated to the United States, Columbus Day celebrates a commitment to cross an ocean and a border and start a new life in the new world.”

O’Farrell told City News Service that he is aware that some Italian Americans may have attachments to the holiday, but there are other better ways to celebrate Italian culture, arts, food and contributions.

“There is a complete disconnect and separation from any of that to Christopher Columbus,” he said.

For some Native Americans who attended the City Hall heritage month event, the holiday would bring more attention to a population that is often ignored, while Navajo tribe member Glenn Talley noted that a day like an Indigenous Peoples Day would “straighten out some of the issues of the past.”

L.A. Approves Harsher Tobacco Sale Penalties

August 20, 2015 by · Leave a Comment 

The City Council Tuesday unanimously approved harsher penalties for retailers that sell tobacco products to minors in Los Angeles.

The proposal adopted on a 14-0 vote will impose a 30-day suspension of a retailer’s tobacco permit the first time it illegal sells tobacco products to minors. The previous law only required issuing a “letter of reprimand” to retailers for the first violation.

The second violation would result in a 90-day suspension, the third would lead to a 120-day suspension of a retailer’s tobacco permit, and if a retailer commits four violations within five years, the retailer’s permit will be revoked, under the changes adopted Tuesday.

The amendments also call for retailers to post a notice when their permits are revoked or suspended, and would prohibit retailers from advertising tobacco products during that period as well.

Councilman Mitch O’Farrell, who authored the measure, said it “could result in preventing up to 1,200 minors per year from becoming addicted to tobacco and nicotine.”

O’Farrell cited a statistic indicating that 64 percent of adult smokers began before they were 18 years old.

O’Farrell also said that in Los Angeles, 24 percent of tobacco retailers were caught selling tobacco products to minors, compared with 7.6 percent statewide.

The stronger penalties would bring the city “into the same level of compliance and enforcement as other cities” in California, O’Farrell said.

L.A. Council Approves Northeast Bridge Retrofit

June 11, 2015 by · Leave a Comment 

 The Los Angeles City Council Tuesday unanimously backed a $50 million plan for seismically retrofitting a bridge over the Los Angeles River, despite opposition from pedestrian and bicycling activists.

The council approved “option 1” for the Glendale-Hyperion Bridge, which includes four lanes, bike lines in both directions, and a pedestrian path north of the bridge.

The council’s 11-0 vote prompted some members of the audience to “boo” the decision. Critics of the plan were pushing for “option 3,” which calls for bike lanes and sidewalks in both directions, reducing the lanes from four to three, and a crosswalk with a signal on the east of the bridge.

The two council members whose districts include the bridge dismissed the third option and urged their colleagues to support option 1.

Councilman Mitch O’Farrell said the bridge is heavily used and a required connection for the nearby police station, and “to needlessly create a regional traffic jam five days a week because of a road diet is just folly.”


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