The Los Angeles Community Development Bank, formed to rebuild neighborhoods ravaged by riots in 1992, is in danger of shutting down unless it can raise more capital, according to a report released last week by the city government.

The city, a primary backer of the nonprofit bank, reported that bad loans and lawsuits by borrowers have depleted loan-loss reserves and other administrative funds. The city is also recommending that the bank outline how it would "phase out" its operations in case it cannot be recapitalized.

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