Django Local Settings

I'm trying to use local_setting in Django 1.2, but it's not working for me. At the moment I'm just adding local_settings.py to my project.

settings.py

DATABASES = {
    'default': {
        'ENGINE': 'django.db.backends.mysql', # Add 'postgresql_psycopg2', 'postgresql', 'mysql', 'sqlite3' or 'oracle'.
        'NAME': 'banco1',                      # Or path to database file if using sqlite3.
        'USER': 'root',                      # Not used with sqlite3.
        'PASSWORD': '123',                  # Not used with sqlite3.
        'HOST': 'localhost',                      # Set to empty string for localhost. Not used with sqlite3.
        'PORT': '',                      # Set to empty string for default. Not used with sqlite3.
    }
}

local_settings.py

DATABASES = {
    'default': {
        'ENGINE': 'django.db.backends.mysql', # Add 'postgresql_psycopg2', 'postgresql', 'mysql', 'sqlite3' or 'oracle'.
        'NAME': 'banco2',                      # Or path to database file if using sqlite3.
        'USER': 'root',                      # Not used with sqlite3.
        'PASSWORD': '123',                  # Not used with sqlite3.
        'HOST': 'localhost',                      # Set to empty string for localhost. Not used with sqlite3.
        'PORT': '',                      # Set to empty string for default. Not used with sqlite3.
    }
}

The problem is that local_settings.py doesn't override settings.py. What is wrong?