The City of Los Angeles talks a great game about the "love in at the park" of its version of the Occupy movement. But clearly the old guard apparatus isn't yielding ground as fast as the rhetoric. I find it interesting that the city's administrators are implying the proposed ordinance forces them to break contracts, cost the City money, and delay civic projects. To my knowledge the language of the proposed ordinance does not in any way establish such immediate ineligibility criteria with respect to doing business with any financial institution. Rather it sets up incentives criteria to expand access for new entrants who are more aligned with the civic objectives of the City to be advantaged for future business opportunities. More likely the CAO is worried about the reputational risks to the city's credit rating, a situation I do not see as improving as long as Wall Street and its allies control the fate of state and local bond ratings. Yes, the same NRSROs that decided junk mortgage-backed securities can rate AAA, the U.S. government isn't a risk-free benchmark, and a TBTF bank's ratings can conveniently fall when it finally suits the needs of the investment world.
Will the City of L.A.'s proposed ordinance have the effect of displacing those firms that are less suitable for the needs of not just Los Angeles but any municipality that chooses this path? Yes. Duh! That's the whole point of it. By creating an environment where the confluence of interests between local government and the finance and banking apparatus align, one creates the kind of community reinvestment environment we need to actually achieve a real economic recovery. Failing to think out of the box is what's kept us in a mess that is now half a decade old.
Oh and don't count the incumbent firms doing business with the City out of the game. While the current tactical play for them is to protect the cabal by taking on postures about the dire implications of social change, they'll likely be the first to adapt rather than risk losing the fees from their revenue streams with the City. They are as able to adapt as any other competitor in the market, indeed probably even more so.
So why the waffle? So far no guts, no glory for La La Land.
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