San Leandro city leaders are caught firmly between the desire of some councilmembers and progressive activists to completely divest from Wells Fargo, and a lack of viable options to replace the troubled institution as the city’s banking services provider..
Nearly two years ago, San Leandro city officials directed staff to sell its $700,000 investment portfolio with Wells Fargo following the bank’s spate of scandals and controversial support for the Dakota Access Pipeline, a project scorned by many progressives and environmentalists. A separate action by the City Council to replace Wells Fargo with a bank with a more favorable reputation, continues to move slowly.
If not Wells Fargo, then who? The San Leandro’s Finance Committee grappled with the question last week during a meeting on April 2. The city’s day-to-day banking services contract went out for bid last November. Wells Fargo, JP Morgan/Chase, and BNP/Bank of the West, all offered bids. All three have varying degrees of investments in the Dakota Access Pipeline and other fossil fuel projects.
“What is the least evil of all them?”-San Leandro Councilmember Ed Hernandez offering a solution for choosing a new bank when all of the bids are associated with fossil fuels.
Based on price and previous community investment in San Leandro–two main parameters in the Request for Proposals–Wells Fargo was deemed by the city’s Finance Department to be the superior bid.
“I know that is not what people want to hear. The people here tonight are here to say, ‘We need to replace Wells Fargo’,” said David Baum, San Leandro’s finance director. “We know the decision is not popular, based on even why we started the process, but that’s how it turned out.”
Whether a bank has invested in fossil fuels was not part of the application, said Baum.
Selection is a major issue when it comes to banking institutions interested in municipal accounts. “The pattern is pretty strong at this point that there is a limited range of banks that seem willing to compete for business of our size,” said City Manager Jeff Kay.
The Finance Committee, which is composed of Mayor Pauline Russo Cutter, and Councilmembers Ed Hernandez and Benny Lee, urged for the Finance Department to cast a wider net for applicants, and return next month with an update. “I think we should be cautious in our expectations,” Kay added.
The move came at the behest of Lee, who did not attend last week’s meeting, but relayed concern to Cutter that he believes some local banks were unaware of San Leandro’s interest in securing bids for its banking services contract.
The apprehension on the part of San Leandro leaders to move forward with renewing Wells Fargo’s contract, without any other viable alternative, was clear last week. A number of public speakers spoke resolutely for the need to cut ties with Wells Fargo.
Continuing with Wells Fargo, a majority of the speakers told the committee, amounts to condoning its banking misconduct, which includes falsifying customers’ accounts, and support for fossil fuels, a number of speakers said. Similar sentiment was issued for JP Morgan/Chase, the largest banking institution in the U.S.
All of the bids involve fossil fuels, said Hernandez, who rationalized whether the city should just pick the bank with the smallest amount of investments. “What is the least evil of all them?”
But Hernandez also voiced concerned about significant costs and delay associated with changing over from Wells Fargo to a new bank. “I want to be sensitive to the citizens, residents in the audience, but I also want to be a good financial steward,” he said.
Cutter agreed. “My goal is to find a business that can handle our city business,” she said. “I’m not going to put our city at risk with a lesser bank.”