City council to consider switch from Wells Fargo

Wells Fargo, the nation's largest mortgage lender, is also the bank for the City of Berkeley. Photo: Lance Knobel

Update, 01.31.12: Wells Fargo spokesperson Ruben Pulido sent us the following statement at 4:30 pm today:

“Wells Fargo is committed to the city of Berkeley.  We are working with local leaders to support the community and help people who are facing financial challenges. Over the past three years, Wells Fargo has donated more than $3 million to 89 nonprofits in Berkeley. Wells Fargo works diligently with customers to find solutions that prevent foreclosures. Over the past year, less than 2% of homeowner-occupied loans in our servicing portfolio have proceeded to foreclosure sale. Wells Fargo currently owns less than 10 properties in the Berkeley market.”

Original story: The City of Berkeley might switch its banking from Wells Fargo, seen as one of the major banks at the heart of the financial crisis and mortgage meltdown.

At tomorrow night’s City Council meeting, a proposal by Jesse Arreguín and Darryl Moore asks staff to evaluate shifting the city’s banking relationship from Wells Fargo when the current contract expires at the end of 2012.

“We have a responsibility to show we are investing the taxpayers’ money not only in a fiscally responsible way, but in a socially responsible way,” said Arreguín. “We want to do business with someone who invests in our community.” 

If passed, the recommendation asks staff to report back to council by May. Arreguín said that would allow for a banking RFP to be issued this summer, and for the council to reach a decision by the fall.

“Berkeley has a record of using its voice to lead to social change,” Arreguín said. “Through the actions we take, we’ve been able to influence other cities.” He cited Berkeley’s early action on divestment from South Africa in the 1970s as an example of the city’s record.

In their recommendation to the City Council, Arreguín and Moore write that “Wells Fargo Bank… was a key part of the subprime lending crisis which led to our overall economic collapse”. Wells Fargo and Bank of America were particular targets of November’s Move Your Money Day, which had a significant response in Berkeley.

Berkeley has used Wells Fargo since 2004, when it left Bank of the West. The contract was last renewed in 2009. The recommendation before the council asks staff to look at alternatives “including but not limited to Community Banks, membership-based Credit Unions or Community Development Financial Institutions (CDFI)”.

Given the scale of Berkeley’s banking needs — the city budget exceeds $300 million — Arreguín said it was important to make sure any institution was adequately capitalized to handle the city’s business. That might rule out smaller institutions, he said. According to Arreguín, the Peralta Community College District is also considering switching its accounts from Wells Fargo.

Arreguín said any decision would clearly depend on the report from city staff. “But I hope we do end up moving our money,” he said.

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  • Anonymous

    Love this idea! I switched to Patelco a few months ago, and I’m thrilled with my choice to move away from a big bank and to a community-oriented credit union. Here’s hoping they do this!

  • Lhasa7

    Although I get nervous whenever I hear that the notorious Berkeley City Council wants to flex its “social responsibility” muscle yet again, it is always meritorious to dump Wells Fargo.  Here’s a good link with resources:
    http://moveyourmoneyproject.org/

  • http://caviarcommunism.us West Bezerkeley

    I left WF myself after 18 years because I can’t continue to support the big banks.

    However, where the city is concerned social responsibility needs to take a backseat to fiduciary responsibility to the taxpayer. There are too many instances when the city hasn’t been exemplary with its fiduciary responsibilities & I certainly hope this won’t end up becoming another of those instances.

  • lvw

    Great idea. We switched to Mechanics Bank a year ago, and we love it.
    People there are helpful and responsive, and the bank covers the  ATM
    fees for other banks, worldwide. But the biggest reason we switched is
    because Mechanics really contributes to our community. Every December
    the Berkeley Holiday Fund sends out over 850 checks to Berkeley citizens
    who are in financial need. Mechanics cashes those checks for no charge.
    They get nothing from this except the knowledge that they are helping
    people in the community. City funds should be invested in banks that contribute to our city.

  • Tom Miller

    Bravo! A wonderful opportunity for Berkeley to “put their money where their mouth is”.

  • TTPCS

    I was advised by somebody on the city’s staff that my planned 12/30/2011 Close of Escrow on a property that required a trivial but necessary service from the City would have to wait until their offices opened again on 1/3/2012 – at which time they would have five business days to act on my application.

    Keep in mind that the purchase/sale of the property meant both several thousands of dollars in transfer taxes as well as increased property taxes since the sale price was higher than the existing assessed value.

    I would strongly prefer to see Mr. Arreguin express concerns about the short-sightedness of this situation (which could be repeated because the policy of year-end office closures) and ones like that take money away from the city ahead of his (admittedly proper) concern about the city doing even more to fulfill its social responsibility.

    What about Berkeley’s fiduciary responsibility to its citizens and its responsibility not to interfere with small business people like me (a job creator in 2011) whose success
     could be hurt by these short sighted policies?

  • FixTheStreets

    That might be a little less pleasant than you allow.

    Looking at the annual report for the Berkeley Public Education Foundation, I note that Wells Fargo is the only community bank in the top three tiers of giving.  It also appears again in the fourth tier, along with Bank of the West.  Mechanics bank doesn’t show up until tier 5.  I do not see Patelco at all.

    If Berkeley doesn’t want to conduct business with these banks out of principle (i.e. not just because of a business decision based on pricing/service/whatever), then it shouldn’t continue to accept community support from them either.

    How about it Jesse?  Will you call on BUSD to return these funds in solidarity with your call to “do business with someone who invests in our community” ?

  • Anonymous

    Have you tried to contact us about the situation?

  • TTPCS

    No I have not.  How do I contact you?

  • shorty

    As they should!  If they want to be on the bandwagon about other social responsibility issues, this is a must.  I just switched from Chase and B of A who liked to kick me when down.  Just moved to Mechanics.  Nothing but great service thus far.  Down with the big banks.

  • Anonymous

    Call our office at 981-7140 (My cell is on the answering machine, just in case). Alternatively, you can also email asanchez@cityofberkeley.info