LOS ANGELES WILL NOT RENEW COMMERCIAL BANKING CONTRACT WITH WELLS FARGO
The Los Angeles City Office of Finance has confirmed that the city will not renew their commercial banking contract with Wells Fargo Bank. The bank did not submit a Request for Proposal (RFP) banking contract after Los Angeles City Council’s unanimous vote on December 13, 2017, to enforce a minimum Community Reinvestment Act (CRA) rating of “Satisfactory” for banks bidding on the City’s contracts. Wells Fargo has a substandard federal CRA rating of “Needs to Improve,” and therefore unable to participate in the city’s bidding process.
After a year-long campaign of persistent public pressure from Divest LA, indigenous leaders, environmental organizations and social justice groups, to create greater socially responsible guidelines for our public finances, 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.
Divest LA commends LA City Council for standing alongside the people of L.A. to redirect public funds into more ethical financial institutions. The City has also adopted a new 30-point Social Responsibility scoring system for all banks, making it the most progressive RFP banking contract in the country.
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 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, championed by Councilmembers Paul Krekorian, Paul Koretz, Mitch O’Farrell, Mike Bonin, and LA City Council’s Budget and Finance Committee, 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 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.
Shannon Rivers, Akimel O’otham, Gila River Indian Community and Divest LA Advisory board member states, “What happened here today, in Los Angeles, is a testament to what can happen when people from all walks of life, indigenous, black, brown, and white, come together to slowly dismantle the banking systems that for far too long have violated the trust of the community. Moreover, todays actions reflect the hard work and sacrifice of indigenous and non indigenous people working in solidarity to mandate that cities break business relationships with companies that support development projects that contribute to global warming and the destruction of mother earth.”
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.
Divest LA Lead Organizer Trinity Tran states, “Today’s confirmation that the City will not be renewing their contract with Wells Fargo, delivers a powerful message to all extractive and predatory industries. If you harm our communities, we will defund you.” Trinity continues,“We pushed for the City of Los Angeles to play by its own rules by disqualifying Wells Fargo for a substandard CRA rating, we moved the City to strengthen the social responsibility scoring system for it’s banking contract, and increased its weight by 30 points- making it the boldest in the country. We hope our 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.”
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.
Divest LA is a true testament of people-power in action, advocating for a solution-focused agenda to put power back into the hands of the people. Organizers drafted policies to amend existing banking contracts, lobbied as citizens, and packed City Council and Committee meetings for months, delivering public comment. Divest LA Community Ambassadors gathered the support of Neighborhood Councils across the City, representing the voices of over 400,000 Los Angeles resident stakeholders. The Divest LA Change.org petition garnered over 38,800 signatures.
The volunteer-led movement is now organizing for the next phase of the campaign: Public Bank LA. Organizers envision the ultimate form of divestment as a push for the City of Los Angeles to divest from all predatory and extractive Wall Street banks by creating a publicly-owned city bank, 100% accountable to the needs of local communities.
