The Davis City Council voted late Tuesday to sever ties with Wells Fargo after residents voiced concerns about the company’s involvement in the controversial Dakota Access pipeline and regulators last year found the bank created unauthorized consumer accounts.
City Council members voted 5-0 to seek a new bank – or possibly a credit union – to handle the city’s finances.
They said they were responding to residents who took particular issue with Wells Fargo’s role as a financier of the Dakota pipeline, as well as a scandal regulators uncovered last year in which the bank set up bank accounts for consumers without their knowledge. Some council members said they wanted to direct the city’s financial business toward a smaller bank based locally.
Davis currently relies on Wells Fargo for its checking needs, credit card processing for utility bills, investment safekeeping and water revenue bonds, among other services. The city fully transitioned to Wells Fargo in July 2011 for those services and is no longer under contractual obligation to stay with the bank, according to a city staff report.
In the past, staff members said, some local banks have been unable to provide all the services the city needs or to meet legal requirements for handling municipal funds.
Mayor Robb Davis asked staff members to determine whether the city could parcel out elements of its banking activities to smaller firms. Although it might be more efficient to have all services provided by a single bank, he suggested the city consider sacrificing some efficiency for other values.
To change banks, Davis will have to start a new bidding process. Council members asked staff members to lay the groundwork for that process – and exclude Wells Fargo from receiving an invitation. The city will continue banking with Wells Fargo until it selects a new financial provider.
Davis maintains an average cash balance of $1 million in its Wells Fargo account and has approximately $30 million in an investment portfolio for which Wells Fargo provides reporting services, according to Pamela Day, Davis financial services manager.
Davis Councilman Will Arnold said all four of the large banks that have branches in Davis have a financial stake in the Dakota Access pipeline. Besides Wells Fargo, that includes U.S. Bank, Chase and Bank of America.
“Most of the people at Wells Fargo are good people, and they don’t deserve scorn – it’s still OK to hang out with them,” said Mayor Pro Tem Brett Lee. “But yeah, there’s something wrong with what’s going on at that bank at the higher levels.”
Most people who addressed the council at Tuesday’s meeting cited Wells Fargo’s involvement with the Dakota Access pipeline as a primary concern. They urged the council to establish social and environmental criteria to help guide the selection of a new bank. Several people said it was important that the city “put its money where its mouth is.”
In a statement Wednesday, Wells Fargo said, “While we are disappointed that the city has decided to end our relationship, we stand ready to support the city with its financial services needs in the future. We will continue investing in this diverse and dynamic community that Wells Fargo has been devoted to.”
The bank added that it is one of 17 financial institutions involved in financing the Dakota pipeline and that its loans equal 4.8 percent of the total amount. It said bank officials meet with Standing Rock Sioux tribal leaders “on an ongoing basis. We discuss, understand and respect their concerns.”
The city of Sacramento last year decided to stop doing business with Wells Fargo over the unauthorized account issue. The bank said in October it was “disappointed” with the decision, though it understood “the concerns that have been raised.”
The Davis vote came on the same day the U.S. Army Corps of Engineers informed Congress that it would authorize the pipeline route under the Missouri River – a path that opponents have said would harm the Standing Rock Sioux, who rely on the river for drinking water.
Earlier Tuesday, the Seattle City Council voted to divest from Wells Fargo because it is helping finance the pipeline that would deliver oil from the Dakotas to Illinois.
Protesters have gathered at the Standing Rock Indian Reservation for months. They scored a victory in December when then-President Barack Obama’s administration announced it would halt construction under the Missouri River so federal officials could conduct further reviews.
But President Donald Trump, a pipeline supporter, signed an executive order soon after his inauguration last month, calling for an expedited review of the project.