Los Angeles Divests $40 Million from Wells Fargo and Sets the Stage for Socially Responsible Banking and Full Divestment
On Tuesday, Los Angeles City Council unanimously voted 14–0 to begin the process to divest $40 million in holdings from the city’s investment portfolio with Wells Fargo. After four months of persistent public pressure from Divest LA, Indigenous Peoples, and supporters, on a campaign for bank accountability and the creation of new ethical banking standards, the City of Los Angeles now moves towards a paradigm shift in its relationship with for-profit banks.
The initial divestment of $40 million is an important first step in untangling the relationship between the city and the controversy-mired bank. The passing vote by all City Councilmembers sends a clear message to Wall Street banks: Los Angeles will not allow our contracted service providers to engage in unethical business practices. Wells Fargo’s most recent notorious and unethical business practices include: opening millions of fraudulent bank accounts, engaging in predatory lending practices, and financing destructive non-renewable energy projects, which includes funding a significant portion of Energy Transfer Partner’s Dakota Access Pipeline. With this vote, Los Angeles will move in the right direction by aligning our money with our values to prioritize people and planet over corporate profits.
“The movement to have the City of Los Angeles divest from Well Fargo stems from the recent struggles at Standing Rock which raised public consciousness about the corrupt and unethical business practices by financial institutions complicit in ecological destruction, treaty violations, and the cultural genocide of marginalized and Indigenous Peoples, in addition it is a small victory for water protectors across mother earth,” said indigenous leader, Shannon Rivers.
The securities divestment follows Monday’s commitment by the City’s Budget and Finance Committee to explore options for the cancellation of the banking contract with Wells Fargo, further strengthen the Request for Proposal (RFP) process, creating social justice components for the RFP process, and hold banks accountable to the Responsible Banking Ordinance.
Divest LA organizer Trinity Tran states, “The Divest LA movement is the people’s response to big banks that promote social and environmental injustices. Even California’s own top banker State Treasurer John Chiang severed our state’s ties with Wells Fargo for their fraudulent activities. Today, the City took a big step forward in using financial deposits as leverage to ensure our communities thrive.”
City Council is not simply considering a full divestment of billions from the City’s depository accounts with Wells Fargo; it is seeking to change the fundamental relationship between the city and big banks. This includes unbundling 800 banking contracts into smaller contracts. The Office of Finance has been instructed to create recommendations to review and score financial institutions in its own Community Investment Act selection process. City Council has also requested the City Attorney report on ending financial ties with Wells Fargo due to its downgraded Community Reinvestment Act (CRA). Recently, New York City Mayor Bill de Blasio cited Wells Fargo’s “Needs to Improve” CRA rating as grounds to freeze all future contracts with the bank.
As Los Angeles citizens, we are proud that our City Councilmembers are standing for a better banking system to ensure our communities and our residents thrive. Thank you Councilmembers Mitch O’Farrell, Paul Koretz, and Mike Bonin for taking the lead and introducing this very crucial legislation. The continued actions of City Council to create a new era of accountability for financial institutions and corporations doing business with our city will strengthen Los Angeles’ position as a national progressive leader.