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|Santa Monica City Council to Consider Divesting from Wells Fargo Bank|
By Niki Cervantes
February 9, 2017 -- The Santa Monica City Council on Tuesday will consider divesting all its funds from scandal-plagued Wells Fargo Bank because of its “business practices” as well as its role in financing the $3.8-billion Dakota Access Pipeline.
The motion, co-authored by Council Members Tony Vazquez and Terry O’Day, asks the council to direct City staff “to examine its investment practices and consider divesting all City funds from Wells Fargo.”
It goes to the full council for a vote at its February 14 meeting.
"Activist attention to DAPL (the pipeline) renewed my attention to Wells Fargo more than any other concern related to past practices," O'Day said.
"Councilmember Vazquez and I have long sought strategies to prioritize local investment and the time is ripe to reconsider this relationship against that goal as well."
Vazquez also said he was inspired by the intense battle over the 1,170-mile underground pipeline, rejected by former President Barack Obama but revived by President Donald Trump.
But he was equally concerned by the other controversies swirling around of the the world's largest banks
“Wells Fargo has acted terribly,” Vazquez said. “Predatory lending, what it did to all those homeowners. We would be sending a message.”
Vazquez said the City should be placing its money in the hands of locally-based financial institutions instead of an international company.
“We always go with the big boys,” Vazquez said. “But what have they done for us in return? We should be supporting our local businesses.”
The motion comes just days after the City of Seattle voted to end its financial dealings with Wells Fargo, which total about $3 billion, in a show of support for the pipeline protesters.
On Tuesday, the city council in Davis (which is just west of Sacramento) also voted to divest from Wells Fargo and start sending about $124 million in municipal funds elsewhere.
On the same day, the Army Corps of Engineers said it granted an easement for the pipeline to cross under the Missouri River north of the Standing Rock Sioux Reservation, clearing the path for construction of the final 1.5 miles.
It is unclear how much of Santa Monica’s City funding is tied up with Wells Fargo. A January update on cash and investments from City financial officials cites a Wells Fargo “Custodial Account” totaling $425,771,433 as of last year.
The value of cash and investments held in the City’s pooled portfolio is $710.9 million, the report said.
The report also names Wells Fargo in association with a variety of individual accounts, including $25.9 million for the Santa Monica Redevelopment Successor Agency, and monies for payrolls and other accounts.
Although Wells Fargo is one of 17 banks financing the pipeline, the project has focused more attention on the bank at a time when it already is embroiled in controversy.
A scandal last fall over employees creating fake bank accounts in customer names to increase profits and bonuses resulted in a $185 million penalty for fraud, although regulatory agencies are said to still be investigating.
Meanwhile, profits dropped 14 percent, and Wells Fargo has announced it will close 400 branches nationwide by next year.
In 2012, the Justice Department announced Wells Fargo would pay $175 million to compensate more than 30,000 minority borrowers allegedly pushed into risky and expensive loans during the heyday of a housing boom that subsequently collapsed, driving many to foreclosure.
The Justice Department said Wells Fargo -– the nation's largest residential home mortgage lender -- charged African-American and Latino borrowers higher rates and fees for home loans, even when they qualified for better terms.
Wells Fargo did win dismissal on Friday of two 2015 lawsuits accusing it of violating the federal Fair Housing Act by engaging in predatory lending practices in Los Angeles and Chicago.
The suits were filed by the city of Los Angeles and by Cook County, Illinois, which includes Chicago.
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