April 4 — The Los Angeles City Attorney’s Office has released an amended “Responsible Banking Ordinance” with language requiring any bank contracting with the city (or applying for a city contract) to disclose its sales goals and other potentially predatory business practices. If passed by a full city council vote, the rules would be the first of their kind nationwide and will require that the financial institutions bidding for Los Angeles’ $17 million taxpayer-funded contracts are transparent about their sales goal tactics and employee compensation.
“Today, we stood up against the big banks and their army of lobbyists, and won,” said Ruth Landaverde, memer of the Committee for Better Banks and former Wells Fargo and Bank of America employee. “The city attorney’s proposal is a result of thousands of Los Angeles bank workers and residents coming together to demand that the city put our interests over those of big banks. This is an important step forward to eliminate — once and for all — the unethical sales goals and predatory practices that swindle working families and ultimately caused the Wells Fargo scandal.”
The motion, first introduced by Councilmember Nury Martinez, would require financial institutions to certify whether or not they:
- Set or allow individual or branch-level goals or requirements for the sale of a consumer financial service
- Consider the quantity of an employee’s sales of consumer financial products and services as a basis for employee advancement, discipline, termination or compensation
- Have policies, protocols and training in place at both the employee and management level to help prevent the abuse of sales of consumer financial services and products
“Taxpayer dollars should not fund banks that rip off working families with predatory products and abusive sales goals,” said Maria Loya, policy director for the Committee for Better Banks, Los Angeles. “I urge the city council to pass this version of the Responsible Banking Ordinance and put forward a master banking RFP that truly puts our city’s best interests first.”
The RBO updates follows stronger guidance from the Los Angeles Community Review Board on Responsible Banking, which issued recommendations late last year to reform the city’s banking system. Through its investigation and a public hearing opened by Rep. Maxine Waters, D-Calif., the board advised that Los Angeles prioritizes banks that “do not use sales performance as a factor in discipline or termination” for city contracts and create an ordinance that “promotes strong environment, social and governance principles.”