LA CITY COUNCIL DISQUALIFIES WELLS FARGO FROM COMMERCIAL BANKING RFP
On Wednesday, Los Angeles City Council unanimously voted to disqualify Wells Fargo from bidding on the City’s upcoming commercial banking services contract. Wells Fargo will be unable to participate in the Request for Proposal (RFP) for banking services due to the bank’s downgraded federal Community Reinvestment Act (CRA) rating. The RFP requires a minimum CRA rating of “Satisfactory” for banks bidding on the City’s contracts. Wells Fargo has a substandard federal CRA rating of “Needs to Improve”.
After nine months of persistent public pressure from Divest LA, indigenous leaders, environmental organizations and social justice groups, the City of Los Angeles took a historic step to divest from Wells Fargo, a bank infamous for financing the Dakota Access Pipeline, predatory lending, illegal foreclosures and opening millions of fraudulent accounts.
Earlier this year, the City of Seattle divested $3 billion from Wells Fargo by ending its nearly two-decade relationship with its primary financial services provider. Not long after Seattle’s historic vote, the City of Davis, California took a similar action by divesting $125 million in city accounts. The City of Santa Monica followed suit, divesting $1 billion in annual transactions from the bank. The City of Los Angeles is the latest to end its relationship with Wells Fargo due to immoral and illegal business practices.
Public pressure campaigns have sprung up nationwide, calling on city governments to divest their funds from unethical banks. The divestment movement grew exponentially in strength due to the backlash against the Dakota Access Pipeline, and in support of the Standing Rock Sioux, indigenous rights and environmental justice. Cities, pension funds, universities and other organizations are under growing pressure to divest from fossil fuel companies and the banks financing these destructive, extractive industries.
For the City of Los Angeles, the new RFP contract will debundle over eight hundred Wells Fargo accounts to provide opportunities for community banks, credit unions, and subcontractors to compete for City banking services. Commercial banking contracts will now be distributed to twelve banks, with one primary and one secondary bank in each service category.
As a result of the newly strengthened RFP, banks will be scored and ranked on factors including regulatory and enforcement actions, community lending, and social responsibility. Los Angeles will lead the way with the most progressive RFP banking contract in the nation, with 30 points for social responsibility on a 130-point scale. In comparison, Seattle has 15 percent scoring on social responsibility, while San Francisco has 5 percent.
In June 2017, the grassroots Divest LA movement successfully persuaded Los Angeles City Council to begin the process to divest over $40 million in holdings from Wells Fargo. Divest LA intends to continue working with the City to divest from fossil fuels, private prisons, tobacco companies, and immigrant detention centers.
According to Divest LA, their advocacy for policy change in leveraging the public sector to hold private financial institutions accountable for unethical business practices were in part inspired by Bernie Sanders’ populist calls to “break up too-big-to-fail financial institutions” in his 2016 presidential campaign.
“Today we made progress as an entire resistance movement. The vote in City Council delivers a powerful message to all extractive and predatory industries. If you harm our communities, we will defund you,” states Divest LA lead organizer Trinity Tran. “We made the City of Los Angeles play by its own rules by disqualifying Wells Fargo for a substandard CRA rating, we moved the City to create a social responsibility scoring system in its banking contract, and increased its weight in the RFP by 30 points- this makes it the boldest in the country. We hope today’s grassroots victory gives energy to divestment movements across the globe, and inspires ordinary people to merge protest with policy to create real, deep systemic changes.”
Los Angeles City Council’s unanimous vote comes after Divest LA organized a large “flash mob” and press conference in Grand Park, near the steps of City Hall. Over one hundred community organizers and members of the public gathered to create a human art formation, spelling out the word “DIVEST LA”. Environmentalist and author Robert F. Kennedy Jr., The Young Turks’ Jimmy Dore, and indigenous leader Shannon Rivers were among the speakers at Monday’s press conference.