Update, June 7: The City Council in May decided to move ahead with the effort to end its relationship with Wells Faro, resolving to extend its current banking contract for only one year. The council and the city’s task force on responsible banking will draw up a list of criteria defining social responsibility by the end of the year, with the goal of seeking out alternative financial institutions with cleaner track records.
“We know across the board we don’t want to continue to do business with a bad actor,” Councilwoman Linda Maio told Berkeleyside. “However, we understand the city is under a certain amount of constraint.”
Update: Wells Fargo spokesman Ruben Pulido emailed the following response at 4:39 p.m. on March 14:
“Wells Fargo is just one of 17 financial institutions that financed the Dakota Access Pipeline; the loan we made represents less than 5 percent of the total. As a company committed to human rights and environmental sustainability, we respect all the differing opinions being expressed regarding this project.
We greatly value the business relationship we have with the City of Berkeley and are proud of how we support its citizens. From 2013-2015 in Berkeley, Wells Fargo approved 264 home loans totaling $167 million so people could achieve their dreams of homeownership, approved 2,300 small business loans for $112 million so entrepreneurs could grow the local economy, and philanthropically invested more than $3 million in Berkeley schools and nonprofits. We stand ready to continue to work with the city, and remain committed to strengthening the local community.”<
Original story: At its meeting tonight, the Berkeley City Council will consider the implications of severing ties with Wells Fargo, the megabank that has been ensnarled in controversy over both its business practices and investment in the Dakota Access Pipeline.
A Finance Department report on the agenda tonight says it is “necessary” for the city to continue banking with Wells Fargo for the next three years as staff consider other options, but suggests individual services that could be switched over to another provider in the meantime.
In January, the council voted to consider “social responsibility” — or lack thereof — as it selects its next banking contracts. Some council members said Wells Fargo’s investment in Energy Transfer Partners, the company building the Dakota Access Pipeline, and its fake account scandal, call its ethics into question.
The current four-year contract with Wells Fargo, which the city has used since 2004, ends in May. The city has the option of extending the contract for three years twice.
Some members of the council will meet Friday with a Wells Fargo representative “to find out their side of the story because they’ve never been at the table,” said Councilwoman Susan Wengraf, who co-sponsored the proposal to include ethics in the banking selection criteria.
“We’ll make it clear to him that this is a huge account,” she said. “And even though they are an important player in our community – they are philanthropic, and they do give money – the fact is they have to be accountable for what they do nationwide as well.”
The Finance Department report says it could take up to two or three years to select and fully transition to a new bank. The city is also in the process of switching over to a new electronic financial management system, which would further complicate the process, the report says.
But the report identifies specific Wells Fargo contracts the city could potentially drop this year, including a $445,000 merchant service fees contract and a $1.5 million armored car service contract. The value of the city’s total 10-year contract with Wells Fargo is $10,356,000.
This is not the first time Berkeley has considered abandoning Wells Fargo. In 2012, the city considered switching in light of Wells Fargo’s role in the subprime mortgage crisis, but ultimately stuck with the bank.
“I think that the pipeline issue has reenergized the issue,” Wengraf said. “And I think the fact that other cities and agencies have already done it is pushing us forward.”
Seattle was first to end its relationship with the bank in the current storm over Wells Fargo. Closer to home, Alameda has begun divesting as well.
The Finance Department report says the incremental approach to pulling out of certain Wells Fargo contracts has local precedence. UC Berkeley recently ended some of its contracts with Wells Fargo, cutting the overall value in half.
Also on the City Council agenda tonight: a vote to add a non-voting UC Berkeley student to the council dais, and to adopt a new ordinance allowing tenants to take civil action against harassment. The consent calendar includes an amendment to the city code requiring advance notice and public hearings prior to the closing of a health facility. (The proposed closure of Alta Bates Hospital is facing significant pushback from both local politicians and community members.) Early steps toward allowing undocumented residents to vote in city elections, and the initiation of a process to consider the reopening of Willard Pool are also on the consent calendar. See the full agenda.
Before the regular meeting at 7 p.m., council will hold a special meeting at 5:30 p.m. with two items on the agenda: a new debt management and disclosure policy (required by Senate Bill 1029, signed by Governor Jerry Brown in September) and the latest annual crime report from the Berkeley Police Department. Berkeleyside covered the report last week.
Meetings take place in Council Chambers at 2134 Martin Luther King Jr. Way.
