MAILANDER’S LA-Some would-be LA grifters inherit a ton of cash from their forebears, blow through it all in a short time, flirt with bankruptcy, and then do what born grifters inevitably do: start looking for an ambulance chaser to file a big lawsuit against someone with deep pockets, in the hopes of garnering a windfall.
A too familiar tale in the hit-record economy of easily defrauded Los Angeles, which has an ambulance chaser's easy number at the ready on every bus bench and ads for workers comp "specialists" plastered all over billboards in all the less tony parts of town.
But in the most recent cases filed, the shakedown artists are Mayor Eric Garcetti and City Attorney Mike Feuer.
Feuer's office filed lawsuits Thursday and Friday on behalf of the City of Los Angeles against three of the nation's top commercial banks--Wells Fargo, Bank of America, and Citigroup--alleging that the bank's redlining of ethnic communities in the early zeroes forced those communities to sign bad loans at institutions like CountyWide, IndyMac, and Washington Mutual--the real banking sources of the 2008 financial collapse.
As an economic move, this suit goes well beyond the duo's schemes to introduce street vendor permits on a wider civic scale, to give every citizen in a fifth of LA the right to tag his own garage via a new private property mural ordinance, and to shake down Downtown's hipsters by sticking them with $250 jaywalking tickets during the holidays even while City and County experience a spiking spate of forced-entry robberies.
Nobody who ever took a good look at Garcetti's old district of 89% renters or who listened to Feuer bumble through City Attorney debates without offering any real legal experience has ever accused either of being adroit at macroeconomics. Someone's got to pay for all their "social progress" schemes and I guess the first target is big banks--as they have been targeted in Federal rather than civic suits elsewhere.
If it were to unfold in court, the LA suit will be worth watching as a curiosity, because a few confidential witnesses from banks who say officers were incentivized have agreed to testify on behalf of the City of LA. It will especially be interesting because these witnesses almost certainly are from a very subordinate level at the banks, not at the top officer level--where you actually learn what's going on.
But it almost certainly won't reach trial. Nonetheless, Garcetti and Feuer have a lot of nerve filing a hopeful big-ticket lawsuit against Wells Fargo, Bank of America, and Citigroup, three of the top four prongs that hold LA's small and large business communities together and are big enough to finance hundred million dollar enterprises such as blockbuster movies or satellite assembly and launch.
This is not a town like Baltimore or Cleveland, which are glad to have one or two half-billion dollar loan deals a year. This is a town that depends on a multiple of such deals every month. The tail is already wagging the dog here: all three banks also provide tens of millions of dollars to LA in funding charitable arts, cultural, and redevelopment programs.
Especially ironic is the fact that both Garcetti and Feuer served on LA City Council in its far more solvent days--and couldn't keep their own spending in check--while the top banks they're shaking down for cash did a good enough job with their own balance sheets to do the government the favor of remaining in a position to take over insolvents like CountryWide, IndyMac and WaMu.
Untying himself from the mother ship of reality, City Attorney Feuer, never known for being much more than an empty suit, told media the following:
"Banks should not target minority neighborhoods for loans that discriminate nor make loans to minorities on terms that are worse than those offered to whites with similar credit characteristics."
It's hard to know what to do with this formula. On the one hand, Feuer appears to be telling banks that they needed to make more loans to minorities. But on the other hand, that was the precise promise of all the liar loans processed at CountryWide, IndyMac, and WaMu that brought the nation's household finance market to the point of collapse--and that wasn't practiced by Wells, BofA, and Citigroup, which put them in a position to take over the banks when the government asked them to.
I have no idea how much the banks will settle this crazy gold-digger suit for if it doesn't get thrown out soon. They are, a source says, presently talking about tens of millions. This kind of money will easily cover what the City is likely to settle Francine Godoy's suit against the City for. It certainly won't be near the billion dollars the City claims it lost because Wells, BofA and Citi had the good sense to stay solvent while the real perps--the ones who did make risky loans to minority communities--continue to skate.
But it's what happens to Los Angeles after any kind of outcome that could be the real concern here. After all, banks are private businesses, not public utilities, no matter how much Garcetti, Feuer, and their bolshevik goon squad would like them to be. What if they determine as a result of this lawsuit that LA is simply not a good place to do business? What if they start shutting down branches in Anglo communities to balance their presence in ethnic communities?
The Mayor himself and especially his social justice-driven wife seems more interested in getting permits for street vendors and taking walks around Pacoima than he is in the side of LA that makes blockbuster motion pictures or puts weather satellites into the stratosphere.
We should have known this about Garcetti when he told the asset-less, anti-banking Occupiers on the South Lawn of City Hall to "stay as long as you like," and then was obliged to reneg even as they tore up the place and cost the City over a quarter million dollars in damage. He doesn't seem to have much, if any, economic common sense, and his wife is a $15-an-hour true believer. Although I understand both are still working hard on that street vendor permit situation.
This is not the kind of economic retooling that the scattered voters who gave Garcetti his job--those who switched from Kevin James to him rather than Wendy Greuel--anticipated.
(Joseph Mailander is a writer, an LA observer and a contributor to CityWatch. He is also the author of Days Change at Night: LA's Decade of Decline, 2003-2013. Mailander blogs here.)
Vol 11 Issue 99
Pub: Dec 10, 2013