It is unwise for a city like L.A. to focus on a narrow band of criteria when it comes to identifying which banking and financial institutions to do business with. The City needs to see bank responsibility as a holistic picture.
The U.S. is a big country and D.C. isn't the only place exploring ways to find economic recovery formulae. Across the country, cities and states are beginning to chart independent paths to creating their own "islands of recovery".
Richard Alarcon and his colleagues on the L.A. City Council drafted an ordinance calling for the city to favor financial contracts with banks that demonstrate "responsible banking practices" benefiting the economy and people of L.A.
These hearings that could improve the Community Reinvestment Act, the 1977 law designed to ensure banks remain connected to communities. Regulators decided it may be time to update how this law is enforced.
Why isn't one of the pillars of emerging financial regulatory reform the institution of a "Black Swan" test that examines new financial product innovation and subjects it to some form of systemic risk consequence test?