Seattle split with Wells Fargo a year ago over the bank’s investments in the Dakota Access Pipeline and a fraud scandal. But the two are together again after the city could find no other bank to take its business.
The city of Seattle will keep banking with Wells Fargo & Co. after it could get no other takers to handle the city’s business.
The City Council in February 2017 voted 9-0 to pull its account from Wells Fargo, saying the city needs a bank that reflects its values.
Council members cited the bank’s investments in the Dakota Access Pipeline, as well as a roiling customer fraud scandal, as their reasons to sever ties with the bank.
Some council members declared their vote as a move to strike a blow against not only Wells Fargo, but “the billionaire class.”
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“Take our government back from the billionaires, back from [President] Trump and from the oil companies,” Councilmember Kshama Sawant said at the time.
The contract was set to expire Dec. 31, but as finance managers for the city searched for arrangements to handle the city’s banking, it got no takers, said Glen Lee, city finance director. That was even after splitting financial services into different contracts to try to attract a variety of bidders, including smaller banks.
In the end, there were none at all.
“It became clear this was our best and only course of action,” Lee said of the city’s decision to stick with Wells Fargo after all.
The first sign that it would be hard to make the council’s wish a reality came soon after the vote when Wells Fargo too-hastily informed the city it could sever its ties immediately with no penalty for breaking the contract. The bank even promised to help the city find a new financial partner.
But it quickly became clear how hard that would be as the city reworked its procurement specifications and searched for months.
In the end, the city renewed its contract with Wells Fargo last week, and council members held a public briefing on the signing of the contract in a public work session Monday. The contract ties the city of Seattle and Wells Fargo together for three more years beginning Jan. 1 with two optional one year extensions after that.
The city finance office began briefing the mayor and council about the situation last February as it became clear the city would have no takers no matter how it sliced up the business.
The main piece of city business — handling depository services — could only be done by a large bank, and there were no takers in that limited class.
The city cycles about $3 billion a year through Wells Fargo — all the revenue the city receives, even from parking meters. The city’s average daily balance in the bank has been about $10 million, according to Wells Fargo.
“We are pleased to continue providing banking and treasury services to the city of Seattle at the best value for its residents,” Gabriel Boehmer, spokesman for Wells Fargo, based in Portland, said Monday.
While other jurisdictions have punished Wells Fargo for its scandal over the practice of creating millions of fraudulent bank and credit-card accounts, Seattle was the first to make the Dakota Access Pipeline — fully operational since last June — a major reason for severing ties with the bank.
The more than 1,100-mile-long pipeline was opposed by a worldwide coalition of tribal leaders and their allies because of harm to the climate and water due to oil spills and by burning of fossil fuels. The opposition has continued and shifted to new targets, including the larger TransMountain Pipeline in British Columbia.
Glen Simecek, president and CEO of the Washington Bankers Association, a trade association of banks across Washington, said he wasn’t surprised the city had a tough time attracting a new partner.
JPMorgan Chase has been targeted by multiple actions from opponents of the TransMountain Pipeline and fossil fuel development, including a demonstration at the Russell Financial Center last week that shut down Second Avenue in the heart of downtown for hours and resulted in 14 arrests.
“To see them shellacked like that and subject to such disdain by members of the City Council is unfortunate,” Simecek said of Wells Fargo and JP Morgan, a financier of the B.C. pipeline.
“It is a challenge, I don’t envy bankers trying to walk that line. They want to serve the city, but the challenge of an activist city council makes that harder to do.”
He was surprised to hear Wells Fargo had come back for more.
“It was certainly eye-opening when I heard Wells was going to be in this business for at least another three years,” Simecek said. “I imagined that business going elsewhere.”