Alarcon meets-and-greets OccupyLA
Opinion: Councilmember Richard Alarcon must walk a fine line in lending support to OccupyLA. The movement itself, which is becoming a catchall movement against "corporate greed," must forge a more specific understanding of what truly oppresses them economically.
In 2010, Richard Alarcon pushed a banking Ordinance through City Council. The Ordinance, called the "Responsible Banking Ordinance," was meant to make sure that any bank doing business with the City be a responsible citizen, and to track foreclosure prevention and outreach to "unbanked and underbanked persons." The SEIU had a big hand in formulating the legislation.
Sounds good--but since passage of the ordinance, the banks that do business with the City are largely unchanged. After all, it was over-exuberant outreach to "unbanked and underbanked persons" that caused a handful of flaky banks to extend subprime loans that failed in the first place. And those have been absorbed into more responsible banks.
In the run-up to the housing meltdown, many local politicians moaned that banks were being too tight with credit all through the early part of the last decade. They called what the banks were doing "redlining."
In short, some politicians once vilified banks for being too tight with credit, before they presently vilified them for being too loose. And in point of fact, the vast majority of local banks were neither--they were simply prudent lenders.
The primary problem today for both Alarcon and the OccupyLA movement is that when we talk about "holding banks accountable" we are generally talking about banks that no longer exist: we are talking about those Bush-era banks that passed out subprime loans like raffle tickets and that were completely absorbed by other financial institutions. Indeed, the most solvent and responsible players--the ones that didn't over-extend themselves in fictitious subprime loan "market"--are the very banks that were asked to absorb the banks that over-extended themselves.
Yesterday, Alarcon offered "Occupy LA" protestors some encouragement on City Hall's south lawn, and reminded them of his own 2010 initiative. It is hoped he also reminds them that the City presently has many banks that were responsible players through the bad-mortgage meltdown, and that these banks were often ironically asked to loosen their credit in the run-up to the fiasco.