When blue cities pull their money from banks or corporations does anyone hear a tree fall in the forest?
After Seattle City Council voted in February to pull the city’s money from Wells Fargo because it is a lender in the Dakota Access Pipeline project, Portland did it one better last month. Portland’s council voted to divest from corporations entirely, putting money in Treasuries and “other non-corporate options.”
The pipeline, which has caused numerous concerns about its effect on the environment, aquifers, farmland and tribal sovereignty, has caused a few other cities to divest or consider doing so. Wells Fargo’s fake accounts scandal was another issue driving divestment (Seattle earlier dropped Wells from issuing city bonds or brokering investments over this).
Unfortunately, the $10 million average daily balance from Seattle at Wells, even the $3 billion that “cycles through” the bank in a year, is small for an institution with $1.3 trillion in deposits and $22 billion in revenue for the first quarter. Get a hundred cities to follow Seattle and the mosquito bites would turn into something. But considering the divided condition of the country, that’s unlikely.
Even if Wells were to withdraw from the pipeline, it would not lack for eager investors. Most critically, Donald Trump won the presidential election and reversed the Obama administration’s block on the project, as well as a host of other environmental rules and even information on climate change.
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Then Seattle and other cities would have to find other money center banks, the enormous institutions that have the capital, expertise and range of services, including in international markets. No local credit union or community bank could handle the demands. And none of the too big to fail banks have clean hands. The Trump administration and congressional Republicans are slicing up Dodd-Frank Act, which put modest restraints on bad bank behavior.
So do these local moves “work”? Portland admits it stands to lose $4,5 million a year by divesting from corporations, money that could be used for cherished city programs. From a cold short-term economic calculus, they don’t mean much and can even be damaging.
They do stand as a moral act by a city, no small thing. In a city such as Seattle, lacking even an organized political center, divestment rewards the “activist community” on the left. But as with so much else, real change must come from consistently winning elections at state legislatures, Congress and the White House.
Today’s Econ Haiku:
A quiet May Day
Because of the rain or Trump?
Or protest fatigue?