The West Hollywood City Council will be asked to decide Monday whether to extend the city’s banking contract with Wells Fargo, the bank that continues to be embroiled in financial scandals.
The City Council in August 2018, in a three-to-two vote, decided not to renew the city’s contract with Wells Fargo, the city’s bank since March 2014. Council members John d’Amico, Lindsey Horvath and Lauren Meister voted against the renewal while Council members John Duran and John Heiman voted for it.
That vote was in response to revelations in 2016 that Wells Fargo pressured employees to open fake bank accounts in the names of customers who had to pay a fee for those accounts. Wells Fargo has paid out more than $148 million to settle a class-action lawsuit accusing it of setting up those fake accounts. The bank recently announced that it also has reached a tentative settlement in which it will pay $415 million over a lawsuit alleging that it improperly required customers to acquire auto insurance from which it profited. The Los Angeles Times reported today that “Wells Fargo might have to spend as much as $3.1 billion more than what it set aside by the end of March to resolve investigations and other legal woes, up from $2.7 billion at the end of December.“
Wells Fargo still faces more than a dozen investigations and 14 consent orders with regulatory agencies, including a cap on its growth mandated by the Federal Reserve Bank. The latest scandal is the revelation this week that the bank charged its customers inappropriate debit card fees.
Councilmember Duran, then the chair of the Gay Men’s Chorus of Los Angeles, to which Wells Fargo is a major donor, argued last year for renewing the contract because of the bank’s financial donations to LGBT organizations. Councilmember Heilman expressed concern about the difficulty city staff would face transitioning to a new bank.
The Council last year did not choose another banking services provider. Since the formal expiration of the Wells Fargo contract on March 3 of this year, the city has extended the contract on a month-to-month basis while it solicited and evaluated proposals from other financial institutions.
Those who have reached out to offer banking services are Bank of the West, Union Bank, US Bank, and Wells Fargo, which wants to extend its contract. The city’s Financial and Technology Services Department recommends the city renew its contract with Wells Fargo while using Union Bank for “as needed banking services.”
The city currently maintains 12 bank accounts with Wells Fargo. “In addition, the city has over 40 merchant accounts related to Visa/MasterCard and American Express transactions,” says a memo to the Council from the city’s Financial and Technical Services Department. “The city’s banking needs require an experienced financial institution that is fiscally strong, has a robust and secure online banking system, and is able to provide the city’s required banking services on an uninterrupted basis.”
Five members of the Financial Services Department have evaluated proposals from the four banks using criteria stipulated by the City Council that include whether the financial institutions meet the city’s “socially conscious banking policy.” That includes promotion of equality of rights “regardless of sex, race, age, disability or sexual orientation,” the memo states. “ Other social equity criteria include “Past, current, and commitment to future involvement in communities that have a strong representation in West Hollywood (LGBTQ, seniors, Russian, etc.).”
The socially conscious policy also takes a negative view toward financial institutions that have made investments in tobacco or tobacco-related products, private prisons and organizations or companies that support the production of weapons, military systems, or nuclear power.”
The other criteria include whether the bank has a division focused on providing services to local governments and the cost of its services.
The City Council-approved criteria also require that the financial institution being evaluated not be held under any regulatory “consent orders, issued within five years of the date of the RFP for improper sales practices (that are) placed by the Consumer Finance Protection Bureau or other federal or California regulatory agency to protect consumers from improper sales practices; no orders from any other Federal or California state enforcement agency; and (that it) has a National Community Reinvestment Act (CRA) rating of ‘Satisfactory’ as determined by the appropriate regulatory body.”
Wells Fargo has ranked No. 1 in the committee’s assessment, with 79.2 out of a maximum of 100 points. Union Bank ranks No. 2, with 68.2 points. US Bank and Bank of the West share third place with a score of 67.2 points each. Wells Fargo ranked No. 1 in the panel’s Social Responsibility Ranking as well. Wells Fargo’s ranking is despite the continuing financial scandals, sanctions by the Consumer Financial Protection Bureau and the Federal Reserve Bank and the bank’s callout by Bloomberg News as the “go to bank for gunmakers and the NRA.” ]
The Finance Department’s report to the Council says “it appears that they have made progress in changing various banking practices, changing the board composition and have been reaching and assisting those affected; if selected, staff would continue to request updates and monitor them closely. Based on their progress, In March 2019, California Treasurer Fiona Ma removed sanctions put in place by her predecessor that kept the bank from underwriting the state’s bonds and barred California from investing in Wells Fargo debt. As a result, Wells Fargo Bank co- underwrote the $843 million State of California Taxable General Obligations Bonds to fund certain Voter-Approved Projects. “
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.
The City Council meeting will take place at 6:30 p.m. in the Council Chambers, 625 N. San Vicente Blvd., south of Santa Monica. Parking is free in the adjacent five-story structure with a ticket validated in the lobby.
Here’s a hot take: large banks all handle dirty money & support endeavors that are immoral in the real world. It’s just a matter of deciding which one is less evil.
As someone with insider info, WF has to go. They’re rated one of the worst! Fraudulent business practices come to mind when I think of WF & if WeHo council votes to keep them, that says a lot about our representatives. WF got away with their bs while their “lower income customers” got scammed.
Wells Fargo made some mistakes, but who hasn’t. They’ve owned up to the mistakes and working to correct then. On top of that, they are consistently one of the biggest corporate donors in America. To LGBT and other organisations. For one to be soooo naive to think that the other banks listed is perfect, needs to do some research. Union Bank is owned by MUFG. Google “MUFG fines”. Wow. Change of mind now?
West Hollywood. Don’t succumb to the far left mob, and make the RIGHT choice. Vote YES for Wells Fargo.
City National would be a responsible choice. Still awaiting the results of attempting to unwind the ramifications of 4 additional accounts and attached debit cards Wells Fargo deemed suddenly necessary for my mother after the age of 93. She passed away in 2016 at age 98. Copious documents were submitted after the issue was handled by City Attorney Mike Feuer including extensive conversations with regional manager who was advised to not memorialize any conversation or response to my written inquiries and documentation. Her previous bank was taken over by WF where she had been content with a single account and… Read more »
The absurd argument that the city staff will face undue burdens by a change in banking relationship is a complete red herring and should filed in the category of bureaucratic bullpucky. Talk to someone who has multiple times managed multi-account banking relationship changes on how easy the new bank makes it for the client. I am available.
US Bank has been a consistent leader of LGBTQ and other people-forward issues in the West Hollywood community, taking an active and ethical role in local issues through their local and corporate leadership. This is but one reason to consider the bank as a suitable successor to the once-admirable part played by Wells Fargo in West Hollywood business.
This is a ridiculous discussion. Union Bank is a responsible business bank that has been around for a very long time. I haven’t heard of any negative things against it. They should be the City’s bank. Ditch Wells Fargo and be done with it. This City puts too much stock in how businesses feel about LGBT issues. The world does not revolve around that issue and once again, I remind the Council, LGBT citizens of WeHo are the MINORITY population. Stop treating every issue around them. Being socially conscious is fine, but let’s not through the baby out with the… Read more »
Why discuss, a yes decision is in the bag already?
Corrupt Wells Fargo only reflects the corruption and pay for play operation of the West Hollywood City Council.
The Townscape Three: John Duran, John Heilman and Linday Horvath will definetly vote yes. They are owend by institutional corporations and developers.
It’s a joke to even think that Wells Fargo won’t be WEHO’s bank again.