L.A. Community Bank to Be Phased Out

AP ^ | December 21, 2002

[Black Powder]

Troubled Los Angeles Community Bank to Be Phased Out of Existence

LOS ANGELES (AP) -- A federally funded bank created after the 1992 Los Angeles riots to revitalize low-income neighborhoods is going out of business. The Los Angeles Community Development Bank has been plagued by bad loans, poor management and often fell short of its mandate to create jobs for the city's poorest residents.

City Council approved a plan Friday directing it to phase out operations over the next 18 months.

The bank was launched four years after the riots, which erupted following the acquittal of four white officers in the beating of black motorist Rodney King. It was intended to aid businesses rejected by conventional lenders in the city's poorest neighborhoods.

The federal government provided $435 million to the bank, the nation's largest community development lending experiment.

An audit released in September by the inspector general of the Department of Housing and Urban Development found that of 150 businesses the bank assisted, more than 100 did not create or retain required jobs for low- and moderate-income residents.

[stylin19a]

Can this couunt towards reparations?

[dennisw]

The federal government provided $435 million to the bank, the nation's largest community development lending experiment.
______________________

Was the $435 million flushed down the toilet or are the loans actually going to be paid off?

[Voltage]

Probably the toilet..albet a low flush ecology model.

[SAJ]

The former.

Now you know why red-lining exists.

[Tacis]

Come on, you know how this works. The managers were selected because of affirmative action or how well they were related to some black thug politician or pimp. He/she got in office and made dicey loans to homies, relatives, friendly gang members, girl friends, the pastor's referrals, and so on. It was government money, so it was free.

Salaries were good but the bennies were better. I bet there were cell 'phones, credit cards and company cars for a lot of employees. The top guys used limos. My bet is also that you'll find that the outfit bought sky box seats at all the LA sporting events and that the managers lived like emperors in the local community. It's all the usual story.

Commitments made by borrowers were seldom/never checked so as not to offend the borrower or the borrower's rabbi. The administrative follow up will be as race based. Most will get away scott free. However, there will be middle class black borrowers, a mailman, bus driver of school teacher, who treated this as a legitimate obligation and has been repaying their loan like they were supposed to. Should they default, it will be held against them. And, the black race pimps strike again.

[VOA]

The Los Angeles Community Development Bank has been plagued by bad loans, poor management
and often fell short of its mandate to create jobs for the city's poorest residents.

So where are the indictments for fraud? Or a mention of the poor managers being demoted
or fired for frittering away $435 million?

City Council approved a plan Friday directing it to phase out operations over the next 18 months.

Hmmm...wonder if some of that $435 million might have helped the City Council
give such a disasterous organization more than a year to phase out...

[Torie]

I got a loan from something similar to this in Los Angeles (with a subsidized low interest rate), because they drew the map just a few blocks too far west and north. I put in central heating, copper plumbing, a deck, and some other stuff. The yuppies on my block all did the same. Several hot tubs were put in. I got a certificate of commendation from the mayor from taking the loan. And I paid it back. And the cost of the bureaucrats to make sure I was spending the money "wisely" only cost the City about 50% of the principle balance of the loan, so it helped employment too. Do you have a problem with that?

[Bob]

And I paid it back.

Those are the key words in your case. It sounds like a whole lot of people didn't.

[nothingnew]

I got a loan from something similar to this in Los Angeles (with a subsidized low interest rate), because they drew the map just a few blocks too far west and north.

So in other words, you cashed in on something not meant for you in the first place........very slick, if ya know what I mean.

FMCDH

[Torie]

That about sums it up. The odd thing was that the portion of the redevelopment district that the program WAS meant for didn't participate much. It took some savvy to plug one's snout into the trough. However, much of that region gentrified anyway since then (20 years later). It is one of the few bunches of census tracts where the Anglo percentage is increasing. The little bungalows down on the flats next to Alvarado Street just off the Glendale Freeway now go for about 300K each.

[BfloGuy]

Banks are created to take in deposits, make loans, and invest what's left. The purpose is to make money for the shareholders.

When a bank's purpose is to create jobs, revitalize a neighborhood, and right past wrongs it's almost definitely destined for failure.

[dennisw]

You're a solid citizen and paid back a low interest rate guv. subsidized loan. Since you're closer to this situation than others, what is your "sense" of others paying back these same kind loans? BTW> I'm not knocking your taking this loan, there are so many guv. subsidized deals out there.

[dennisw]

You got their number down 1000%. Ain't cynicism an awful thing :) Or is it just your well calibrated BS detector?

[Torie]

If you have equity in your property, the loan will be paid back, absent what SoCal went through in the early 1990's. But the area in the redevelopment district adjacent to where I lived was by no means a slum. It was solid working class Hispanic with a levening of Anglos, some of them gay, made up of single family little bungalow homes or duplexes on quiet streets. Some of the lots down there are large enough (6 to 7 thouand square feet), that I suspect we are going to see a bunch of tear downs and rebuilds soon. So my experience probably isn't applicable.