The Los Angeles City Council on Wednesday approved a diluted version of a bill that would have forced the city to stop doing business with banks that had poor lending records in the city.
The bill, originally introduced in March 2010, gained steam in October in the wake of the Occupy Wall Street protests.
Chief administrative officer Miguel Santana convinced the council to study the issue further before passing legislation, saying it could cost the city $58 million to end contracts with existing lenders.
In a 13-0 vote, the City Council approved a counter-proposal drafted by Santana.
Under the councilman’s plan the city will not attempt to rate the banks, which he contends is better left to federal agencies.
The measure does require formation of a group comprised of city officials, two community activists, two banking industry representatives and two community reinvestment experts. They will then draft a policy on what information banks have to provide if that want to do business with Los Angeles.
Another Santana caveat is that commercial banks and investment banks, which primarily underwrite bonds, will not be judged based on the same standards.
While bond underwriters will not have to divulge the same lending information, they will be asked to provide other proof of corporate responsibility, such as involvement in local charities.