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Big Oil, Big Soda, Big Banks? Big Deal.
Ellen Cushing | Photo: Ramin Rahimian | November 19, 2013
As the Green Party mayor of an oil company town, Gayle McLaughlin is no stranger to conflict. Now, she's taking on Wall Street.
“If you tie your wagon to corporations,” says Richmond mayor Gayle McLaughlin, “and say, ‘They’re gonna get us out of the economic crisis, they’re gonna get us out of the environmental crisis, they’re gonna get us out of the social crisis,’ you’re just allowing more of the same injustice to happen. Because corporations have not solved these problems. In fact, they’ve deepened these problems.”
This is the rhetoric of an activist, not a mayor. It’s certainly not what you’d expect to hear from the mayor of a city where a single company, Chevron, is the largest private employer, the biggest taxpayer, and, until recently, the driving political force. But McLaughlin is a different kind of mayor. While her Bay Area counterparts Jean Quan and Ed Lee have largely abandoned their activist pasts—Lee by cozying up to the San Francisco developers whom he once made a mission of fighting, Quan by botching her city’s response to Occupy Oakland—McLaughlin has, by all accounts, held on to hers. Since 2002, when she entered Richmond’s political fray—first as an idealistic Green Party member, then as a city council member—she has forged a path that’s unique even in this far-left-of-center region: that of the working-class progressive politician.
McLaughlin came to Richmond in 2000, a time when the city was facing a devastating budget crisis and a soaring violent-crime rate that was among the highest in the country. In spite of its problems, however, the city was seeing an influx of blue-collar progressives who had been priced out of Berkeley and Oakland. It was an ideal landing place for McLaughlin, a native Chicagoan from a union family who had spent her 20s and 30s bouncing around the country to take various teaching and social service jobs. Partly as a result of changing demographics and partly as a reaction to widespread cronyism and corruption, the tide in Richmond at the time was turning against Chevron, which, according to veteran councilman Tom Butt, “had pretty much owned the city for a hundred years.” In 2003, McLaughlin, along with various other local activists, capitalized on that energy by forming the Richmond Progressive Alliance, a grassroots political organization predicated on the promise that its members wouldn’t take any corporate donations whatsoever.
McLaughlin started out with what longtime activist and Progressive Alliance cofounder Andrés Soto describes, not unkindly, as “zero political experience.” She had the unfortunate tendency to read her speeches verbatim off the page in front of her, scarcely looking up at her audience. Bred in the tradition of Vietnam-era activism, McLaughlin was not a conciliatory politician. So ideological were her leanings, Soto recalls, that when liberal icon Dennis Kucinich asked to speak with her at a progressive rally, McLaughlin rejected the offer on the grounds that he wasn’t a Green, before Soto convinced her otherwise.
But in 2006, after a two-year stint on the Richmond City Council—and less than three years after entering politics—McLaughlin made Richmond the largest United States city with a Green Party mayor when she defeated incumbent Irma Anderson by just 242 votes. In 2010, she did it again, despite a nearly $1 million Chevron-funded opposition campaign against her and other Progressive Alliance candidates. Since then, Richmond has become ground zero for a kind of radical, anticorporate government activism that’s largely unseen anywhere else in the country.
While many cities—especially blue-collar ones with a history of budget deficits—have worked hard in the wake of the recession to court business of all kinds, Richmond during McLaughlin’s tenure has increased corporate taxes, successfully fought a bid to build a massive casino and resort on its shoreline, and floated what would have been the nation’s first soda tax (it ultimately failed at the ballot box after a $2.5 million challenge from the American Beverage Association). The city has also made a regular habit of antagonizing its largest taxpayer—most notably in 2010, when the city wrested a $114 million tax settlement out of Chevron, and in 2013, when it sued the oil giant for damages stemming from a massive refinery fire.
“We want them to understand that they have to be accountable,” says McLaughlin of her corporate neighbor. “And we’ve [had] many successes. Do we fight them on every single thing? No. We pick those battles that are needed.” That’s not to say that the mayor has lost any of her old predilection for rabblerousing: In September, at the request of Ecuadorean president Rafael Vicente Correa, she toured the Lago Agrio region of the Amazon rain forest, which has been devastated by Chevron oil drilling. East Bay Express reporter John Geluardi would later quote her as calling the oil giant nothing less than “criminal” during the trip.
But all that political pot-stirring is peanuts compared to McLaughlin’s latest endeavor: her war against the entire American mortgage banking system. Richmond’s widely discussed plan, which was conceived by a Cornell law professor named Robert Hockett, is complicated, but the upshot is this: Instead of leaving citizens who are underwater on their house payments to battle the banks on their own, Richmond would seek to buy the mortgages at fair market rate; if the banks refused to sell, the city would then consider using eminent domain to acquire them anyway. The city would then hammer out new, more manageable loans for the homeowners, thereby preventing foreclosures. If Richmond is successful, it will be the first city in the country to employ eminent domain on behalf of underwater homeowners.
“The banks have been unable to fix the situation,” explained McLaughlin at a marathon seven-hour city council meeting in September during which the council voted 5–2 in favor of moving forward with the plan. “So the city is stepping up to provide a fix.”
It’s a risky, possibly precedent-setting battle, one that cities like Chicago and North Las Vegas looked into and ultimately ducked away from. Observers caution that it may spur major lenders like Fannie Mae to make an example of Richmond by pulling money out of it; in fact, in August, after details of the Richmond plan were made public, Wall Street banks declined to refinance $34 million in municipal bonds, despite their A-minus rating. (Not for nothing did the Washington Post describe the plan as “the nuclear option.”) Wells Fargo and Deutsche Bank have already sued (unsuccessfully) to block the plan, arguing that it would deprive the city’s investors of more than $200 million. And it’s not just the biggest of the big banks that have come out fighting: “I think their heart’s in the right place,” the Post quoted David Green, president and chief executive officer of the Contra Costa County Federal Credit Union, as saying. “I just think [eminent domain is] the wrong vehicle for doing it.”
And then there are the local land mines: McLaughlin and her allies are fighting against not just the banks but also an opposition that runs deeply along philosophical and personal lines. Richmond’s political landscape is beset by racialized strife that tends to pit the mostly white and Latino Progressive Alliance against the city’s long-standing African-American, church-affiliated establishment. When the mortgage issue comes up publicly, McLaughlin is often shouted down by opposing council members. At the September meeting, her most vocal critic, Councilman Corky Boozé, blasted the plan, saying that “the city shouldn’t be in the middle of the real estate business on your tax dollar.”
But if ever there were a perfect combination of politician and populace to exorcise the ghosts of America’s subprime mortgage disaster, it might be McLaughlin and Richmond. Home values in the city have plummeted some 60 percent since the beginning of the recession. In that same period, more than 2,000 Richmond homes have been foreclosed on, a situation that McLaughlin and others in and out of City Hall argue has reduced property values (and, by extension, tax revenues), increased blight, invited widespread squatting, and saddled the city with various other negative consequences. According to Councilman Jael Myrick, who voted in favor of the resolution, some 50 percent of Richmond homes are underwater; at the meeting, he and the rest of the council heard from constituents who were broke, scared, and desperate. “This is a really serious problem in Richmond,” Myrick says. “And it’s a problem that the market hasn’t been able to solve, the federal government hasn’t been able to solve, the state government hasn’t been able to solve.”
For her part, McLaughlin understands that Richmond’s effort might not succeed—that it may not, in fact, be possible to upend the entire financial system from a midsize, relatively low profile, blue-collar city. But even if it doesn’t, it’s a symbol, and a start. “It takes great fortitude to be a leader,” said McLaughlin at the September meeting. “We are being leaders now…. If not us, who will?” She read these words from a piece of paper in her hand, but this time she looked up at the audience—at least as often as they interrupted her with applause.
Originally published in the December issue of San Francisco