By Jorge Casuso
September 22, 2017 -- The Santa Monica City Council is expected to vote Tuesday to switch its account to Union Bank after severing ties with Wells Fargo last year over its financing of the Dakota Access Pipeline.
City staff recommended the City enter into a $300,000 contract with Union Bank to provide banking services for five years. The contract with Wells Fargo, which has been the City's bank since 2013, expires on March 31.
"New City policies have imposed sanctions on financial institutions that promote outcomes antithetical to the values of our community," staff wrote in its report to the council.
The Council voted at its meeting February 21 to cut its ties to Wells Fargo after hearing from nearly three-dozen speakers, including several who sang and played drums.
The bank was among the 17 institutions funding the Dakota Access Pipeline, which opponents say stretches onto sacred native land and creates water and other environmental safety issues.
Council members also signaled out Wells Fargo's "deceptive business practices,” which resulted in $185 million in fines.
“Santa Monica is taking a stand against Wells Fargo because they have repeatedly used deceptive business practices,” Councilmember Tony Vazquez said at the meeting.
“Their investment in the Dakota Access Pipeline is the latest egregious action," he said. "It’s our hope that other cities will divest their funds so together we can have a collective and powerful impact.”
After the meeting, a Wells Fargo spokesman told The Lookout that the bank is one of the pipeline project's smallest lenders, putting up less than 5 percent of the project’s $2.5 billion price tag.
Approved on February 28, the City's resolution to divest from the bank cites both its financial support of the pipeline and its "recent history of improper sales practices" for reportedly creating more than 2 million bank and credit card accounts without the customer's knowledge or consent.
In its report for Tuesday's agenda, staff is asking the Council to extend Wells Fargo's contract on a month-to-month basis, expiring no later than June 30, 2018.
"For the transition from Wells Fargo Bank to Union Bank to have minimal impact on the public, City vendors, entities disbursing tax payments and other funds to the City, and City staff, the City must maintain both accounts open simultaneously for approximately four to six months," staff wrote.
In addition to Union, four firms responded to the City's request for proposal --Bank of the West, US Bank, Comerica Bank and J.P. Morgan Chase.
"The City disqualified J.P. Morgan Chase and US Bank from the selection process due to consent orders issued against them by the Consumer Financial Protection Bureau for illegal sales practices," staff wrote in its report.
Among the reasons listed by staff for chooising Union Bank are the firm’s "ability to meet legal and other qualifications" and its "ethical business practices."
The extent of the City's financial dealings with Wells Fargo is not certain. A press release issued by the city at the time of the council vote places its annual transactions at $1 billion, with an additional $4.6 million in Wells Fargo bonds.
