Oakland May Revisit Contract with Wells Fargo
Many Oakland residents watched with envy in the past few months as Berkeley’s city council began to explore divesting from Wells Fargo and moving the city’s money and banking services to a smaller, more community-oriented bank. Peralta Community College District has also begun making moves to divest from large banks. San Jose, San Francisco, and Los Angeles have also taken steps in recent years to encourage responsible banking practices by banks which do business with those cities.
Divestiture has been a longterm goal of some Oakland residents too—in past years, the city council has pursued the possibility of moving the city’s money out of ginormous global financial institutions and into a local bank or credit union, but little has ever come of it. The city has always concluded, as I understand it, that given the volume and variety of banking services that a city of Oakland’s size requires, only a few large banks are capable of handling those needs at a feasible cost. (See, for example, this staff report from 2009 recommending that Wells Fargo be given their current contract.)
The widespread disapproval of how megabanks behaved before and during the current housing and financial crises, along with the Occupy Wall Street movement, have rekindled interest in moving Oakland’s money out of Wells Fargo, which currently holds the contract for both the city’s depository and custodial banking services (at some times in the past, separate banks have handled the two types of banking services, but since 2009, Wells Fargo has handled both). I don’t know what the current prospects are for divesting from Wells Fargo (probably not good!), but it appears that some Oakland councilmembers are at least hoping to wrangle some concessions from Wells Fargo before granting any extension of their contract. A proposed resolution is on the agenda of the City Council’s Finance and Management Committee on Tuesday requiring that any renewal of the city’s contract with Wells Fargo be brought to the council, instead of being potentially extended on the authority of the City Administrator. Here is a memo from Councilmembers Brunner and Kaplan summarizing the rationale for the resolution:
To: Chair De La Fuente and Members of the Finance Committee
From: Councilmembers Brunner and Kaplan
Date: March 13, 2012
Re: Resolution To Require That Any Action To Extend the City’s Primary Depository and Custodial Banking Services Contracts Shall Be Authorized By The City Council
The City’s existing banking services contract with Wells Fargo expires on December 31, 2012. However, Resolution 82060 authorized the City Administrator to enter into two one-year extensions. This resolution rescinds that authority, and requires that any action to extend must be authorized by the City Council.
The role of financial institutions in the foreclosure crisis and recession has created renewed interest in and support for policies to hold banks responsible to the communities they serve. Many jurisdictions in California are now reviewing their banking contracts and considering responsible banking policies.
This resolution is to ensure that the City Council has the opportunity to hold its current contractor to responsible banking policies, and that their contract is not automatically extended without Council review and input.
The councilmembers, in a separate memo, express concern about the difficulty the city has had in getting information from Wells Fargo and other banks about foreclosures and loan modifications, and frustration that the banks have not done more to prevent foreclosures. Occupy Oakland has fruitfully joined forces with organizations like Causa Justa : Just Cause to use direct action to shut down foreclosure auctions and bring attention to the fraud and illegality behind many—if not most—foreclosures. Pressure from a broad coalition of activist groups, unions and churches has also reignited the city’s effort to renegotiate or end its interest rate swap deal with Goldman Sachs. It seems to me that the city’s negotiations with Wells Fargo—or other banks vying for the contract—may well be another place where strategically-applied pressure from Occupy Oakland and other groups might yield tangible results.
The proposed resolution (admittedly limited in scope) from Councilmembers Brunner and Kaplan will be discussed Finance and Management Committee meeting at noon today in the Sgt. Mark Dunakin Room on the 1st floor of City Hall. (And no, I won’t be there; I’ll be sitting on a barstool somewhere watching a soccer game on TV—priorities, people!)