L.A. warns banks: Don’t set sales goals if you want city's business
In response to the fake account scandal at Wells Fargo, the Los Angeles city council wants to impose new requirements on banks that seek to do business with the nation’s second-largest city.
By a 12-0 vote, the city council took a step Wednesday toward requiring such banks to disclose whether they set individual or branch-level sales goals or requirements.
Under the measure, banks that want to do business with the city would have to reveal whether they consider how many sales employees make as part of decisions regarding advancement or termination. In addition, the banks would have to disclose whether they have policies and protocols to help prevent sales abuses.
The measure, which was sponsored by Councilwoman Nury Martinez, instructs the city attorney to propose new language to be added to an existing city ordinance that imposes requirements on banks seeking to do business with the city. The council is expected to vote on the expanded ordinance in the coming months.
“We, as leaders, have a responsibility to the hardworking people of our city,” Martinez said in a press release. “Working with banks that treat them like commodities is simply unacceptable.”
The changes were supported by the Committee for Better Banks, a union-backed initiative, which said they would be the first requirements of their kind in the U.S.
“Today’s measure takes an important step toward addressing the abusive and unethical sales goals that caused the Wells Fargo scandal,” Maria Loya, Los Angeles policy director for the Committee for Better Banks, said in a press release.
“It couldn’t have happened without the thousands of Los Angeles bank workers and residents who stood united against the big bank lobbyists who pushed to keep their practices hidden from the light of day.”
During Wednesday's city council meeting, Lara Larramendi, government relations director at the Los Angeles County Business Federation, said that few institutions have the capacity to manage the city's financial needs, and she argued that drafting burdensome new policies will make the process more costly.
San Francisco-based Wells Fargo has said that its employees created as many as 3.5 million accounts without customer authorization between 2009 and 2016. The scandal grew out of a 2013 story in the Los Angeles Times, which led to an investigation by the L.A. city attorney’s office.