Will the City End Its Affiliation with Wells Fargo over DAPL?

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, UBS, 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 says. “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.

Yesterday the Seattle Times reported that the Seattle Affordable Housing, Neighborhoods and Finance Committee voted Wednesday to pull $3 billion in city funds from Wells Fargo.  The Seattle City Council went further, pushing forward legislation that would obligate the city to weigh social justice issues in considering future contracts.

The Seattle committee voted 8-0 on Wednesday to divest $3 billion, with the full vote by the city council scheduled for Monday.

“We all agree: Divestment is our goal,” councilwoman Debra Juarez said in the meeting, according to the Seattle Times.

With the pressure from activists, the Davis City Council will consider a Request for Proposals (RFP) for banking services.  Back in 2010, the city initiated an RFP for banking services.  At that time, the city received seven proposals: Bank of America, Chase Bank, First Northern Bank, River City Bank, Union Bank, US Bank and Wells Fargo Bank.

Staff wrote, “After a thorough review of the proposals, with an emphasis on ability to provide basic banking services, fee structures for banking services, related experience in providing like services to public sector agencies within California and the region, as well as the ability to access short-term credit with favorable terms, staff recommended that the City enter into a corporate account agreement with Wells Fargo Bank, N.A. for the provision of banking services.”

Staff notes 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.”

As we noted, “Davis is not alone in reviewing its relationship with Wells Fargo; other jurisdictions across the state and country have had or are having conversations about doing the same.”

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.

The city would need to release a new RFP if they wish to secure a new vendor.  The process would take some time.  The soonest they could do a transition would be by September.

PFM Financial Management did a review of the city’s account analysis for Wells Fargo and concluded that the city was unlikely to see any sort of financial cost savings through a new competitive RFP process.  They write, “Wells Fargo is waiving multiple services for the benefit of the City including an automated sweep, positive pay monthly base, and ARP transmission per item.”

PFM notes, “Compared to the price levels we have seen other similar sized institutions receive, the City is receiving competitive pricing with unit prices below average on many items.”

But of course this is not a financial issue, and the total cost right now is about $21,500 per year.

The issue of DAPL seems central to the issue and, this week, the Army Corps of Engineers was given the go-ahead to move forward with construction along DAPL’s previously planned route, after former President Obama had appeared to end the process.

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