The Bank of Los Angeles: A Blank Check for the City?

Photo courtesy of channone, flickr

Photo courtesy of channone, flickr

Last Tuesday, the Los Angeles City Council passed a Herb Wesson sponsored motion, without any discussion, that requested “the City Attorney, with the assistance of the Chief Legislative Analyst, to prepare and present the documents necessary to place on the November 2018 Ballot the necessary amendment to Section 104(g) of the City Charter to authorize the City to form a municipal bank.”

The proposed City owned Bank of Los Angeles would “provide financial services to residents, reinvestment in the City to support the development of affordable housing and local infrastructure, and banking solutions for other local businesses that are not currently served by the commercial banking industry.”  There have also been discussions about the Bank serving the unbanked, cash intensive pot industry.

Yet despite all the hype associated with the municipally owned Bank of Los Angeles, the City has not prepared a business plan or even an outline of a plan for the Bank.  Rather, the City is asking us to give the City Council and Mayor Garcetti a blank check to establish the Bank despite a well thought out report by the Chief Legislative Analyst that identified numerous problems.

These limitations include that there is no identified source of funds to capitalize the Bank (estimated to be more than $1 billion), that City funds could not be deposited in the Bank for at least three years, that the Bank would have difficulty providing adequate collateral to support the City banking requirements, that the Bank would have difficulty qualifying for deposit insurance, and that start-up costs would be “exorbitant” with no available sources of cash to cover these losses.

After listening to the February 28 meeting of the Ad Hoc Jobs Committee where the Chief Legislative Analyst’s report was discussed, it was apparent that the members of the City Council have no clue about the banking business, the need for excellent management and strong credit standards, and that loans are not grants and need to be repaid.

Rather, the members of the City Council view the Bank as a source of cash to fund their pet projects and those of their cronies. But loans, both principal and interest, need to be repaid on a timely basis if the Bank is to remain solvent.   Otherwise, the Bank is out of business, the equity capital is wiped out, and the depositors take a hit.

This was certainly the case with the Los Angeles Community Development Bank that was established after the 1992 riots with money from the Federal Government.  But this loan fund that was under the control of the City Council closed its doors in 2004 because too many of the politically connected borrowers failed to meet their obligations.

However, with the Bank of Los Angeles, it is our money, not the Washington’s, that is lost if the Bank tanks.  And it the City takes a hit, it would have an adverse impact on the already poor level of service we receive from the City.  …

Click here to read the full article from City Watch LA

Los Angeles Seeks to Stop Oil and Gas Boom

Photo courtesy of channone, flickr

Photo courtesy of channone, flickr

Los Angeles City Council President Herb Wesson has introduced a motion to end oil drilling and production near public places in a measure that could kill America’s next oil and gas fracking boom.

Over the objections from the oil industry, Wesson introduced a motion on April 19 to conduct a study regarding how the Department of City Planning, with the assistance of the city attorney and the city’s petroleum administrator, could change the city’s zoning code to require a setback for oil and gas activities within public and residential facilities.

Wesson’s motion stated, “The closer oil and gas wells and storage facilities are to sensitive land uses, the higher the risk that the health and safety of nearby residents could be threatened.” And in a call to action, Wesson added, “Due to the ongoing health impacts experienced by residents from neighborhood drilling activity, it is imperative that we identify and implement a meaningful, long-term solution.”

Despite Wesson’s claims about health risks, the Center for Disease Control found that from 2003–2013 as the U.S. oil and gas extraction industry doubled the size of its workforce and increased drilling rigs by 71 percent, the annual occupational fatality rate in the industry decreased 36.3 percent, to 1,189 deaths over the decade. About 40 percent of fatalities were due to transportation accidents, and 26 percent was due to equipment accidents. The CDC found illnesses and fatalities from all environmental exposure were extremely low.

Wesson and his environmental lobbying allies claim they are only seeking a 2,500-foot setback, or about a half mile. But with California Division of Oil, Gas and Geothermal Resources website revealing that there are about 3,000 active wells, tens of thousands of inactive wells, and underground pipelines running throughout the city, the proposed setback would essentially ban oil and gas activity in almost 100 percent of Los Angeles.

The new city-level effort follows a failed 2014 national initiative that was led by California environmental groups including Earthjustice, California Communities Against Toxics, California Safe Schools, Center on Race, Poverty & the Environment, Comite Pro Uno, the Esperanza Community Housing Corporation, and many more.

The California sponsors attempted to have the Obama administration’s Environmental Protection Agency (EPA) issue a new regulatory order under Section 112 of the Clean Air Act that would allow all oil and gas production wells and associated equipment to be listed as an “area source” of toxic pollution, if the EPA Administrator “determines that emissions of hazardous air pollutants from such wells present more than a negligible risk of adverse effects to public health” in any combined metropolitan statistical areas with a population of at least 1 million.

Give that the definition of “negligible” according to the dictionary.com website is: “so small, trifling, or unimportant that it may safely be neglected or disregarded,” the EPA would have been able to ban all oil and gas drilling, production and refining in the 54 combined metropolitan statistical areas in America that have a total population of at least 206 million, or about two-thirds of the entire U.S. population.

The 1,750-square-mile Monterrey Shale Formation that covers the entire Los Angeles Basin is potentially the richest shale oil reserve in the United States. Since water is key to the shale hydraulic fracturing drilling process, Breitbart News predicted that a state economic boom would take off as soon as California experienced its next cyclical rainy season.

With all California reservoirs already above historic levels, record snowpack levels in the Sierras, and the National Oceanic and Atmospheric Administration predicting a National a very wet El Niño during the 2017-18 water year that begins on November 1, the L.A. City Council motion could kill a potential local economic boom.

This piece was originally published by Breitbart.com/California