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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.

In the new scapegoating climate, if many who presently find LA unaffordable take a hard look at their own personal finances, they may find that it is not the fault of banks, nor of how much taxes you pay (which is not as high a percentage of income as it was in the 1960's or 1970's). It's mostly the fault of cities having billionaire mayors--like Bloomberg in NY--or of mayors and Councilmembers being owned by billionaires--like Villaraigosa is, by Broad--or multimillionaires, who have made sure that, among other things, their rent is too damn high.

In LA and NY, the owner-occupied to renter ratio is 39-61...in other cities, it is more like 50-50. It's been the same in LA and NY for nearly a decade, and both mayors have only encouraged more rentals (to please multimillionaire developers) rather than policies that would assure more owner-occupied homes.

A short supply of homes and surfeit of rentals drives the top-tier of rental prices higher, not lower, as rentals naturally fill the void left by the "missing rung" in these city's housing ladders.

If the people protesting at OccupyLA are not talking too loudly about what they're specifically targeting with their protest, it's likely because they haven't yet paused to understand why they are paying so much higher a percentage of their incomes on rent than their parents were a generation ago. It's not the fault of banks that they are, and it's not the fault of the taxes they're paying. That math simply does not pencil out. In occupying the south lawn of City Hall, the fault may lie closer to the protesters than they realize.