By Adam Popescu, 10/20/2011
Breaking Ties With Lenders Could Cost More than $58 Million
City officials’ love affair with Occupy LA may be grinding to a halt. After passing a referendum in support of the group last week, and maintaining solidarity with their disenfranchised constituents, L.A. officials may pump their brakes now that they know that severing ties with the city’s financial institutions may grind city services to a halt.
Breaking ties with major lenders would cost the city upwards of $58 million in losses to city services, according to City Administration Officer Miguel Santana, and would send borrowing costs through the roof.
On the other side, a banking proposal penned two years ago by Councilmember Richard Alarcon (District 7), who along with Councilmember Bill Rosendahl (District 11) authored the just-passed Occupy LA referendum, has been gathering steam within the Occupy camp. The bill seeks to rate banks based on social responsibility, and would deny business to institutions that fail to perform. Santana is calling on the city council to not rate banks based on social responsibility, given the city’s cash-strapped status. Santana has said he understands concerns, but countered that a cash-strapped city is not in a position to rate banks. In response, Alarcon has accused Santana of pandering to the banking sector.
The city council is expected to discuss the banking proposal next month. Santana wants the council to suspend any new bond financing to prevent losing money on fees associated with a new city banking policy. That means cutting plans to issue $110 million in short-term debt to pay for parking complexes and refurbishing on the 6th Street Bridge in downtown L.A., and a new Los Angeles Zoo reptile exhibit.
Tags | Occupy LA