Panel endorses Wells Fargo contract despite controversy
Finance Committee backs bank to continue handling Santa Fe’s accounts
Aproposed extension of a contract with Wells Fargo, the city of Santa Fe’s fiscal agent, is headed to the City Council after winning the endorsement of the city Finance Committee. The committee unanimously agreed to the extension this week despite some councilors’ concerns about the company’s financing of the controversial Dakota Access Pipeline as well as fraudulent account-creation practices that rocked the banking giant last year.
Adam Johnson, the city finance director, said he and staff members, in analyzing bid proposals and considering whether to divide some of the $210 million in city accounts among other local banks and credit unions, were cognizant of residents’ and policymakers’ unease about the San Francisco-based bank.
But Johnson and staff ultimately determined Wells Fargo should continue to handle all the city’s banking, treasury and investment business after the current 4-year contract expires at the end of the year. The bank provided the most detailed submission among the five bidders, they said, and scored best overall in the service evaluations and highest in the “community initiatives” section — an area they emphasized in their evaluation.
“My primary concern is always to manage the taxpay-
ers’ dollars, safely, effectively and efficiently,” Johnson said. “We certainly appreciate and are sensitive to the broader communal concerns; however, we don’t put that into this analysis of [requests for proposals].”
Johnson said Wells Fargo, with seven local branches and more than 90 employees, was more of a community bank than others that responded to the city’s request for proposals, even those with names that would suggest local ties, such as Bank of Albuquerque, which has only one Santa Fe branch and whose parent company is headquartered in Oklahoma.
He said the emphasis on community initiatives, a new wrinkle added to the bid process, incorporated local concerns about the bank. According to a city finance memo, Wells Fargo invested $168.5 million in local consumer and small-business loans in 2015 and donated $200,000 to local nonprofits and charities in 2016; Wells Fargo staff also volunteered more than 1,500 hours in 2016.
Wells Fargo “provided strong examples of investments in the Santa Fe community through a variety of avenues including local volunteer work, community focused grants and small business loans,” according to the memo, which also cited the bank’s local economic development and “outstanding” Community Reinvestment Act rating.
Bryan Scott, a regional manager for Wells Fargo, told councilors he was “personally very disappointed with some of the things that have happened in other areas of our institution this year” and said he vouched for work local employees have done in Santa Fe.
“What you’re seeing and reading in the papers is not indicative of the culture and commitment we have to our communities,” Scott said.
The other banks to submit bids for some or all of the city’s fiscal agent services were Bank of Albuquerque, Century Bank, Los Alamos National Bank, and New Mexico Bank and Trust. Bank of Albuquerque, New Mexico Bank and Trust and Wells Fargo were the only bidders to submit complete proposals for all of the services requested by the city; Century Bank bid to provide custodial services of the city’s investment accounts, and Los Alamos National Bank’s bid focused on merchant services, investment services and stand-alone accounts.
Wells Fargo accommodated the city’s preference that its assets constitute less than 10 percent of the fiscal agent bank’s total assets. Christina Keyes, the city’s treasury officer, said the two other institutions that provided complete proposals, Bank of Albuquerque and New Mexico Bank and Trust, also met that 10 percent benchmark.
“Banks don’t want to have an exclusive accountholder and the risk that comes with that, and we don’t want that for the city, either,” Keyes said. “We understand, on both sides, that’s something we need to acknowledge.”
In addition to lower fees and efficient tech at Wells Fargo, Keyes also cited the city’s transition to an enterprise resource planning software system. Wells Fargo has extensive experience working with the city’s vendor for the program, Keyes said, adding that continuity across the multiyear process would be “very beneficial.”
“They do extensive work directly within our community,” Keyes said of the bank. “These are people who live here, work here, raise their kids here. They are a part of our city.”
A former vice president of a Santa Fe Wells Fargo branch filed a wrongful discharge suit earlier this year, alleging his superiors knew about the deceptive account-creation practices and fired him for raising the issue.
Keyes said the city asked questions about the deceptive practices during its evaluation of Wells Fargo, but the “inappropriate behavior” concerning accounts was part of the bank’s retail unit, which the city does not do business with, Keyes said.
“We would have explored it further,” Keyes said, if local instances of the sham accounts had been revealed, but the city “did not come across instances of local behavior.”
And in a letter addressed to city leaders and “Santa Fe constituents,” Scott, the regional Wells Fargo manager, sought to “set the record straight about a few facts” concerning Wells Fargo lending funds to the developers of the 1,200-mile Dakota Access Pipeline.
Concerns about the company’s involvement with the pipeline, which drew sustained protests from Native Americans and others who feared leaks from the underground pipeline would endanger sacred lands, have led to an “enhanced” due diligence, Scott wrote, to “include more focused research into whether or not indigenous communities are impacted and/or have been properly consulted.”
The City Council will consider next week whether to extend the contract for another four years.