Q & A: A look at the Seattle City Council bill to severe the city’s banking relationship with Wells Fargo because of the bank’s role as a lender to the Dakota Access Pipeline and an earlier scandal surrounding its business practices.
The Seattle City Council is considering severing the city’s banking relationship with Wells Fargo because of the bank’s role as a lender to the controversial Dakota Access Pipeline project and a scandal over the bank’s opening of millions of fake banking and credit-card accounts.
The City Council meets at 2 p.m. Tuesday to hear and take action on a bill concerning its banking relationship with Wells Fargo and fair business practices. A subcommittee of the council approved the bill with amendments last week.
Here’s what that bill would do:
Q: Is this a divestment bill?
Most Read Local Stories
- Northern lights may grace the skies tonight. Here are the best times to see them in Seattle.
- Coronavirus daily news updates, May 12: What to know today about COVID-19 in the Seattle area, Washington state and the world
- Fire crews battle blazes at Issaquah's Village West, Snohomish car repair shop
- Coast Guard could triple base size on Seattle waterfront as U.S. ramps up Arctic presence
- When can 12- to 15-year-olds get Pfizer's COVID-19 vaccine in Washington state? Here's what we know
A: Not really. That word usually pertains to withdrawing funds from a pension or investment fund. The council bill, CB 118905, instead would result in terminating the city’s banking relationship with Wells Fargo.
Q: How much money is involved?
A: The city cycles about $3 billion a year through Wells Fargo, accounting for all revenues it receives, even from parking meters. The city’s average daily balance in the bank has been about $10 million over the past six months, according to Wells Fargo
Q: When did the city start banking with Wells Fargo?
A: The current contract with Wells Fargo began Jan. 1, 2013, and extends through Dec. 31, 2018, with the option of five additional one-year extensions. Wells Fargo was chosen though public competitive bidding, beating out Bank of America, Union Bank and US Bank.
Q: Why make a change?
A: Council members voting for the bill in committee focused on their opposition to Wells Fargo’s lending to the Dakota Access Pipeline, as well as concern about the bank’s broader business practices.
Q: How is the bank involved in the Dakota Access Pipeline?
A: Wells Fargo is one of 17 lenders to the project, providing $120 million of the $2.5 billion borrowed by developer Energy Transfer Partners of Dallas to build the $3.7 billion pipeline from western North Dakota to Illinois.
Q: Is Wells Fargo’s participation in the pipeline project the only reason for the bill?
A: Under the direction of Mayor Ed Murray and the council, Wells Fargo no longer is issuing bonds or brokering investments for the city after it was discovered that Wells Fargo created millions of fake, unauthorized bank and credit-card accounts. The decision last October cost Wells Fargo a $100 million bond deal on behalf of Seattle City Light.
Q: How widespread is the pushback against Wells Fargo?
A: Other governments — including the city and county of San Francisco, Los Angeles, Santa Clara (Ca.) county, the state of California, Massachusetts, Pennsylvania and Illinois all have initiated sanctions based primarily on those sales practices, according to Wells Fargo. Those sanctions affected existing bond deals and suspension of various types of business for a period of between one and two years.
Q: Does the bill bar Wells Fargo from banking with the city in the future?
A: The bill directs the mayor to inform Wells Fargo the city will not be renewing its financial-services contract and will refrain from new cash investments in Wells Fargo securities for at least three years.
The bill expands the use of socially responsible practices as a criteria for selection of contractors for most procurement contracts undertaken by the city. The bill also forbids city contractors from engaging in unfair business practices, and excludes any contractor running afoul of the law from bidding for five years.
Socially responsible practices would be worth at least 20 percent in the bidding process for selection of a financial institution to provide depository banking services.