Council Sends Message by Not Sending Current Bankers an RFP
Council sent a message to Wells Fargo by sending out a new RFP (Request For Proposals) that moved staff’s recommendation with the addition of adding a screen for socially responsible investment, but with the added provision that the city not send an RFP to current banker Wells Fargo, who is a key investor in the Dakota Access Pipeline (DAPL). The council was unanimous in their approval of the motion.
Staff noted that members of the community have brought forward concerns about the city’s relationship with Wells Fargo, “given Wells Fargo’s unethical banking practices (i.e. opening unauthorized accounts) and their involvement in the Dakota Pipeline venture.”
At two separate meetings in January, activists came to the council during public comment to ask the city of Davis to divest from Wells Fargo. In addition to the ongoing fallout over the Wells Fargo scandal, where employees secretly created unauthorized bank and credit accounts, there is the concern that Wells Fargo is one of the biggest investors in the Dakota Access Pipeline (DAPL).
An investigation by Food & Water Watch’s Hugh MacMillan found that dozens of financial institutions are bankrolling the Dakota Access Pipeline, including Bank of America, HSBC, US Bank, Goldman Sachs, Wells Fargo and JPMorgan Chase.
“They are banking on this company and banking on being able to drill and frack for the oil to send through the pipeline over the coming decades,” Mr. MacMillan said. “So they’re providing the capital for the construction of this pipeline.”
Wells Fargo and Bank of America were targeted during a November protest. The protest outside of Bank of America caused the bank to close its blinds.
Councilmember Will Arnold noted that “it is fortunate that we’re reaching the end of our contract with Wells Fargo.” He noted that the four big banks in Davis – Wells Fargo, Bank of America, Chase, and US Bank – all have helped to finance the Dakota Access Pipeline.
He suggested that there were a couple of things that the council could do. One was that the 2010 RFP mentioned “a socially responsible investment policy.” All that contains is basically a non-discrimination clause. “My understanding is that’s the law,” he said. “I think our socially responsible investment policy ought to have more teeth than that.”
He noted that, while not on the agenda, “it will inform very clearly what our options are going forward and what institutions we work with in the future.”
Mayor Robb Davis added that the city is reviewing their entire investment approach as they potentially move to a new firm. “In the context of that,” he said, “we asked that we have a conversation about our so-called ‘social screens’ or the issues we want to make sure that are accounted for in our broader investment. This would also influence, potentially, banking policies.”
“We’re moving in that direction,” Will Arnold said. “That is the message I want to send to folks that are here.” The key question he said is really, “what is our policy?
He added, “Today what we are essentially going to do is direct staff to send out an RFP. To me what we can do to send a message is, frankly, not send one to Wells Fargo. They don’t get one. I think we ought to send one to everyone else – that includes people who we might one to screen out, just because we might want to compare the different offers we’re getting from local banks… to what Bank of America, US Bank or Chase are able to provide.
“But I think the message that we can send today is Wells Fargo does not get a Request for Proposals,” he said. “I think they’ve done enough to earn that.”
Mayor Pro Tem Brett Lee said that the reason the council is discussing this is that they are supportive of the community input for divesting from Wells Fargo. He said he was supportive of the suggestion to exclude Wells Fargo from the RFP “because that’s really what we’re talking about tonight.”
He also sees the need to help local businesses out. He said it will be interesting to see if the other banks can better meet the city’s needs now.
“I think it’s important to not villainize the regular working folks at Wells Fargo,” he said. “They aren’t the people making these decisions.” He also related a story from Tennessee where Wells Fargo targeted low income people with unsecured loans that caused many people to lose their homes.
Councilmember Lucas Frerichs noted that council was very responsive to community concerns. He said that “we clearly need to move away from Wells Fargo.
“It’s not just about Dakota Access Pipeline,” he said, noting their involvement in the private prison movement as well. “It’s extremely important.” He also referenced the fake bank account scandal as well. “They pretty much got away with a slap on the wrist.”
The other issue, he said, was the need to spend and invest locally. He noted in the context of Big Box retail discussions that, for every dollar spent, a huge percentage (70 percent) went outside of the local community. “Whereas if you spend that dollar locally, that is all continued to be invested in the community,” he said. “That’s one of the key reasons for us to do this… it’s really putting that money to work growing our local economy.”
Mayor Robb Davis was supportive of the motion and its focus on DAPL, but was wondering why not just have an RFP that says “if you’ve been fined by the Consumer Finance Protection Bureau in the last five years you will not get to bid on our RFP. That captures any bank engaged in unethical practice, mind you that does not say that they admitted wrongdoing, because they never do. But they pay fines sometimes in the hundreds of millions of dollars.”
Davis followed Seattle from earlier in the day, as the second city to divest from investing in Wells Fargo.
In addition to Seattle:
- The State of California Treasurer froze, for at least one year, a series of long-standing business arrangements with the bank.
- Santa Cruz County voted to bar the bank from new business with the county for a year.
- Los Angeles took an action in October to add customer protections to its requirements when it releases an RFP for future financial services.
- Philadelphia and Minneapolis are both exploring whether to sever ties with Wells Fargo.
Wells Fargo has defended their policies. They released a statement indicating, “While Wells Fargo is one of 17 financial institutions involved in financing the Dakota Access Pipeline, the loans we have provided represent less than five percent of the total. We are obligated to fulfill our legal obligations as outlined under the credit agreement, as long as the customer continues to meet all of its terms and conditions.”
The bank added, “We are committed to supporting responsible development of all forms of energy.”
Wells Fargo insisted on its commitment “to environmental sustainability and human rights.
“As a company committed to environmental sustainability and human rights, we respect all the views being expressed by Tribal governments and communities, other groups and individuals in the Dakota Access Pipeline dispute. We hope that all parties involved will work together to reach a peaceful resolution,” the bank said.
—David M. Greenwald reporting