While a majority wasn’t willing to renew the city’s banking contract with Wells Fargo, the West Hollywood City Council last night couldn’t reach an agreement about which financial institution the city should bank with.
Wells Fargo has been the city’s bank since March 2014. But in recent years the bank has been embroiled in multiple scandals that include the creation of 3.5 million unauthorized banking accounts for its customers, requiring some customers to take out unnecessary car insurance policies and improperly modifying the mortgages of others. The bank’s latest issues, revealed last month, involved accusations that Wells Fargo improperly foreclosed on hundreds of homeowner’s loans and that it is being investigated by the U.S. Department of Justice for its handling of tax credits for low-income-housing projects. Wells Fargo’s behavior has led the Federal Reserve Board to take the unprecedented step of restricting its growth until it takes steps to address its problems.
With its Wells Fargo contract set to expire on March 3, 2019, the city sent out a request for proposals from banks that would be interested in handling the city’s checking accounts. Only four banks, including Wells Fargo, responded. An evaluation team from the city’s Finance Department ranked the proposals based on criteria established by the City Council, Wells Fargo ranked the highest with 84 points (out of a possible 100). The other three were Union Bank with 72 points, US Bank with 71 points and Bank of the West with 67 points.
Despite the top score for Wells Fargo and a number of residents’ praise for the bank’s longstanding commitment to the LGBT community, Councilmembers Lauren Meister, Lindsey Horvath and John D’Amico were unwilling to award the city’s banking contract to Wells Fargo.
“I can’t support Wells Fargo having this contract with our city,” said D’Amico. “I’m guessing, given their long and strategic and caring giving over the decades, that having one less account won’t make them change their commitment to our community. It shouldn’t. If it does, then our cynicism is well placed.”
Meister concurred, saying she felt the report evaluating the four banks which responded to the request from the city was insufficient. That report downgraded the rankings of each of the four applicants, noting have run afoul of federal regulations. But the ranking didn’t account for the severity of the applicants’ actions. For example, in June, the U.S. Comptroller of the Currency reported that about 40 banks opened 10,000 unauthorized customer accounts out of a total of 600 million accounts over the past three years. Wells Fargo has admitted to opening 3.5 million unauthorized accounts.
“I don’t feel like I got full information out of this report and I cannot support [giving Wells Fargo the contract],” Meister said.
City Manager Paul Arevalo said the Council could award the contract to Union Bank, which came in second place. However, Meister, Horvath and D’Amico seemed to favor sending out a new request for proposals instead.
Their hope was that more banks would respond this time and the city would then find a financial institute that combines the right mix of socially responsible behavior and respectable banking practices. A number of other California cities, including Alameda, Berkley, Davis, San Francisco and Santa Monica, have ended or are in the process of ending their contracts with Wells Fargo.
“Is there no bank that meets this criteria that can do what we need at a bank for the city?” asked Horvath. “Right now, we don’t have a report that says there is no such bank that meets our values.”
However, Mayor John Duran and Councilmember John Heilman, both of whom favored awarding the contract to Wells Fargo, noted that the criteria by which the city’s financial staff evaluated the banks had been established by the Council itself. Duran argued that sending out a new request for proposals would likely get the same results. He has been a vocal supporter of renewing the Wells Fargo contract because of its support for LGBT organizations, including the Gay Men’s Chorus of Los Angeles, whose board he chairs.
Nonetheless, D’Amico suggested that when news of Monday night’s vote spreads, other banks might opt to submit a proposal. He also indicated the city should establish more criteria upon which to evaluate the banks that respond.
The Council never voted Monday night on sending out a new request for banking proposals, instead tabling the matter while a subcommittee made up of Duran and D’Amico discusses how to proceed.
Heilman noted that he had personal reservations about Wells Fargo’s reputation, but said the council’s primary responsibility was protecting the public’s money and ensuring it is properly handled.
He also noted there would be a number of fees associated with starting new accounts with any of the other banks. Thus, it would be significantly cheaper to stay with the city’s already established accounts at Wells Fargo.
Although the bank contract hearing didn’t even start until 10:45 p.m. (thanks to the length of an earlier public hearing – approval of the Arts Club on Sunset Boulevard – consuming three hours), a good number of people stayed for this hearing, which lasted until after midnight. Twelve people spoke during public comment, ten of whom favored Wells Fargo getting the contract. Most were representing LGBT-related organizations which Wells Fargo has supported over the years.
Brad Sears, who helped found the Williams Institute, an LGBT-think tank based at UCLA School of Law, said that Wells Fargo had helped with start-up money for the Institute in 2001. Richard Ayoub of Project Angel Food reported Wells Fargo offered that meals-on-wheels nonprofit its first loans back in the early 1990s and later donated the money to build kitchen facilities in its new building. Jonathan Weedman, a former Wells Fargo executive and the current executive director of the Gay Men’s Chorus of Los Angeles, said Wells has long donated to that organization and to Christopher Street West, which puts on the annual LA Pride celebration. Alan Acosta of the Los Angeles LGBT Center attested to the progressive values Wells Fargo has and reported that the Center intends to continue using Wells Fargo as its bank.
However resident Jeanne Dobrin, attending her first council meeting in almost a year since falling ill, said Wells had stolen money from its customers and argued that the city should not reward criminal behavior by providing access to more money. Meanwhile, resident Stephanie Harker said Wells Fargo should not get the contract because it lacked ethics and social responsibility. Almost a dozen other residents, who could not stay so late for the hearing, submitted position slips opposing giving Wells Fargo the contract.
The City Council was especially concerned about the socially responsible behavior of the banks being evaluated. The social responsible requirements upon which the banks were evaluated include investments in community economic development (in WeHo, both in the LGBT community and the Russian-speaking community), as well affordable housing developments and small businesses.
Equally important, the city’s standards stipulated that banks should NOT have investments in fossil fuels or nuclear power, weapons production or military systems, tobacco products or privately run prisons. While Wells Fargo and many other banks have made such investments, Wells Fargo has stood out as what Bloomberg News labeled the “go to bank” for the National Rifle Association and gun manufacturers.
Also on the social responsibility scale, the banks should have a national Community Reinvestment Act (CRA) rating of “satisfactory” or better. Beginning in 1994, Wells Fargo consistently earned an “outstanding” CRA rating. However, in March 2017, the federal Office of the Comptroller of the Currency downgraded that CRA rating to “needs to improve.”
The fall in its rating was a result of the federal Consumer Financial Protection Bureau’s fining Wells Fargo for allowing employees to open fake credit or debit card accounts, lines of credit and checking accounts in the names of existing customers, who were charged for those accounts. Regulators determined that Wells Fargo had opened 3.5 million fake accounts, and in September 2016 the bank was fined $185 million as a result. Then in December 2016 it was discovered that Wells Fargo had engaged in other fraudulent activities, including issuing unwanted life and renters insurance policies. In October 2017, another scandal was uncovered when The New York Times reported that Wells Fargo had forced hundreds of thousands of borrowers to buy unneeded auto insurance when they took out car loans, the cost of which resulted in the repossession of cars owned by 25,000 people.
Wells Fargo should not only be denied the privilege of doing business with the City of West Hollywood, it should be broken up as suggested by this article in the Huffington Post.
https://m.huffpost.com/us/entry/us_5b80148ee4b0729515126185
All of the big banks are crooks and frauds. Actually when it came to the housing crisis Wells Fargo did much better than the other banks because they kept there underwriting standards higher, which means they weren’t as preadorty as the other banks when lending. Unless we go with a community bank we should stay with a bank that supports the LGBT community locally. Also, how much are the cost of switching banks? It stupid to incur cost to go to another big banks that is just as bad or worse than Wells and doesn’t support the community locally.
People often talk about the “check and balance” that we as Residents have being the ballot box. That is true to an extent. First, There is a history of the same 5000 people coming out to Vote, in my opinion because the people who don’t Vote feel they won’t be heard by City Council so why bother? Second, Once a person is elected, he/she can do quite a bit of damage to the City in four years. There should be a “Performance Evaluation” of City Council Members every six months by the Residents. If a Council Member is making irresponsible… Read more »
The only way to address the city’s supposed ethics standards (rather hypocritical when considering some of their own lax standards regarding contributions to their PACs from developers) would be to go with a credit union or try to find a regional bank. All national banks invest in all the things we claim to abhor.
I’m glad Wells Fargo wasn’t automatically rewarded with an extension of its contract. Wells Fargo has been a particularly bad actor when it comes to the mistreatment of its customers and defrauding the “little people” out of millions of dollars in fees. Its admissions of guilt and fines tell the story, but who loses jobs? The rank and file employees threatened with the loss of their jobs by managers to open the unwanted accounts. Does anyone go to prison? No, of course not. Just pay the fine and move on. More profits to be made, you know? But good luck… Read more »
An overlypaid City Manager. No elected official should have absolute power. There needs to be checks and balances. The City Council exists for the purpose of listening to the Residents and making decisions
which best serve the Residents and the City. The City Manager’s purpose is to make sure that the councils decisions are implemented in a timely and cost efficient manner. West Hollywood Voters have given way too much power to the Council and Management, they have used that power to ignore the Residents. Their job is to serve to Residents based upon majority of Residents opinions.
Refer to my comment below. When you say they “shouldn’t have absolute power,” which, and what issues should be decided by voters? All of them? Where do you draw the line, if you are, indeed, serious about your election attempt? Please, be specific? How would you do this one different? How would you handle other issues before the Council? And, once again, where do you draw the line between issues they vote on, and “what the majority wants?”And does the majority always know best? How do they gauge the “majority of resident opinions?” Poll each and every thing that is… Read more »
First thing that needs to be done is an oversight committee made up of Residents should be formed whose job it is to make sure that the council, staff and magegment exercises due diligence, complete exploration of all issues, weighing all options before the council votes on them. Make sure that those who should recuse themselves do so. Inform the public with at least three months notice about all issues on the agenda to give them more time for input. We need to engage the Residents more about the decisions regarding our City.
So every agenda item is going to be planned 3 months in advance? Not sure how that will work. I do agree that the City sometimes doesn’t give residents enough notice about public meetings, or agenda items. Regarding recusal, what is the criteria for that? OK, Duran is on the board of the Gay Men’s Chorus, but have other Council members been involved in organizations, in any regard, over the last 40 years, that involved donations from WF? Do they all need to recuse themselves? Also, regarding the “corruption” or “conflict of interest” some might perceive from Duran and the… Read more »
I don’t favor either side, but I remember asking the late, Gary Oliphant, then manager of our local WF, if WF had any interest in helping me with The Tweakers Project. He said, “Yes!”, and they gave us the first corporate check, which was for $1000.00 . It was a lot back then and got us off to a good start. I’m sad that they are caught up in any scandal, whether real or perceived.
Look at some of the dumb decisions the council has made. Why allow them to keep doing the same thing? It’s obvious they need civilian oversight. If you do the same things over and over expect different results, that’s insanity. There is no accountability. We just let the council do what they want without question and then we complain. The council works for the Residents. West Hollywood is not their little kingdom. Residents should have a say and not be treated like subjects.
Once again, why do you think we even have a City Council? We elect people to make informed decisions to represent us. Residents do have a say: by voting, speaking at public comment, reaching directly out to Council Members, getting appointed to advisory boards, and even commenting here, on Facebook, and other parts of the web, which is often seen by the City government. The City has tried to engage the public on certain issues through public meetings, like “coffee with the captain,” “National Night Out,” public meetings on dealing with homelessness and how to use the city-owned property at… Read more »
They can’t decide which criminal bank to go with. Every one of the big banks has a huge history of fraud. Wells, B of A, Chase, etc. So unless you’re going with a small community bank, good luck. It’s all the same corrupt web.
I’m glad that the Council didn’t make any decisions last night. This is something that requires much more exploration and investigation regarding the Bank’s policies, History and Social Progressiveness. Many times, decisions are made without adequate investigation. I also think the final decision should not be made by Council Members or City Management. A Committee made up of Residents should make that decision to ensure transparency and reduce favoritism. If there were time, It should be a ballot issue. Residents should be more involved in decision making at City Hall.
Then why have a council? We make our decisions when we cast our votes, and we enhance that input through public comment, where citizens need to be heard AND respected and not threatened with expulsion. That said, it is pathetic that with voter turnout averaging 25% of registered voters, it takes only 10% of registered voters to elect a council member. Such a lack of democratic participation is what results in favoritism and questionable council actions-there is little accountability for actions! The key is voter turnout! #VOTEWEHO
I disagree that residents should decide via a vote. Maybe, as a committee. We have Council members to do a job for us. Perhaps the process was flawed, but are residents really going to make an informed decision, read the reports, and have any expertise on what financial institution is best fit to manage public money? I watched this part of the meeting in its entirety, and I’m glad that they voted against Wells Fargo. The City should be taking a stand against that bank. At the same time, this is a complicated process, and I don’t believe voters will… Read more »