"Banks were created for people. People were not created for banks,"
Nathan French, a faith leader from Hollywood Adventist Church, Los Angeles, California

On March 5, Los Angeles City Council passed legislation that puts the city on the path to pulling its funds from irresponsible banks and setting new standards for investing public dollars in institutions that offer tangible benefits to the community.  PICO National Network joins SEIU and community allies in helping pass new standards for banks that Los Angeles does business with, including preventing foreclosures and ending toxic financial deals costing taxpayers $10 million.  This signals a new "offensive" by people of faith and local and state governments to make banks compete for our money.

As the Senate debates tightening financial regulations that would prevent banks from engaging in the same reckless practices that led to the near meltdown of our economy, communities and people of faith around the country are beginning to take matters into their own hands to hold banks accountable to their needs and aspirations.

Like many cities and states across the country, Los Angeles is facing record budget deficits that are causing it to slash services and programs that help keep the city safe and livable for its 4 million residents.  With a nearly $500 million budget gap next year alone, the city is proposing to cut services at parks, libraries and public safety programs.

The massive budget deficits facing local and state governments across the country are a direct result of the foreclosure and economic crises brought on by the reckless behavior of the nation's biggest financial institutions.  And, as investors in these banks, we have the power - and responsibility - to do something to change their policies and practices.  

When a foreclosure occurs, not only does a family lose its home, the entire community loses wealth through falling housing values and lost property taxes.  Cities, school districts and other public institutions depend on this tax revenue to fund basic public services such as picking up our trash, plowing the roads, keeping the streets safe, fighting fires, educating our children, and helping care for the sick and elderly.

So far in this crisis, homeowners nationwide have lost an estimated $6 trillion, which in turn is leading to a whopping $439 billion shortfall for state and local governments in 2010-2011.  The pain and suffering behind this massive loss, and the perception that the federal government bailed out the very banks that caused this whole mess while leaving regular people to bear the brunt of it, is fueling much of the anger we currently see in the broader public.

Up until now, cities and towns have been on the "defensive," trying to figure out how to manage the fallout of the immediate crisis.  Do they cut the budgets for the schools or the police?  Do they layoff firefighters or health care workers? 

But on Friday, the city of Los Angeles took the first step in what we expect to be a larger "offensive" by public institutions across the country, passing historic legislation that will set new community standards for banks that the city does business with.

These new standards will ensure taxpayer money is only invested in banks actively working to help families keep their homes, expand lending to small businesses to create jobs, end toxic derivative deals that put public services at stake and relieve the city's enormous budget gap. The move will save the city at least $10 million immediately.

In the initial committee hearing on the legislation in February, Nathan French, a faith leader from Hollywood Adventist Church, a member of PICO affiliate L.A. Voice, testified about how the parable of the unforgiving servant applies to our current times: 

"Banks have been extended mercy by those who control our tax dollars. When they got into debt, we extended grace to them; however, we have not seen that same grace extended to our families and businesses and city. We believe that banks are called to be instruments of justice whenever possible. Banks were created for people. People were not created for banks. To that end, we of L.A. Voice, our clergy and lay leaders, strongly support this move to reward financial institutions that commit to using their power to build a healthy, whole Los Angeles and create accountability and incentives for the big banks to modify mortgages, give fair interest rates to our city, lend to small businesses and affordable housing builders so that our folks can have jobs and affordable homes to rent and buy...Our congregations and national network are already organizing our money to reward those who serve our community by doing these good things."

In addition to testifying at the hearing, PICO worked closely with SEIU, Alliance of Californians for Community Empowerment, the California Reinvestment Coalition, and City Council staff to craft the legislation, and PICO clergy and faith leaders in Los Angeles lobbied their City Councilmembers to support the measure.

To be clear, we are not talking about penalizing big banks.  We're talking about investing our public money in institutions that share our values.  And if we cannot find institutions that are acting responsibly in our communities, then we will leverage our collective dollars to negotiate with banks that are willing to change their corporate policies and practices to favor the needs and aspirations of our communities. 

And public institutions are not the only ones who can do this.  Congregations in every local community can also do the same.  Collectively, faith communities have billions of dollars that they could leverage to win agreements that benefit their communities.  They can make banks compete for their money. 

That's why, over the coming month, PICO, together with allies such as SEIU, will be engaging faith communities and public institutions across the country in a campaign to follow Los Angeles' lead and "invest in your values."  Expect to see more of these ordinances, as well as groups of faith communities beginning to pool their money together to, in the words of Nathan French, make banks work for people, and not the other way around.