Mayor, council reluctantly keep Wells Fargo as city’s bank

Gonzales cites lack of alternatives as reason to keep group with troubled image

City councilors on Wednesday approved a four-year contract extension with Wells Fargo as the city’s fiscal agent.

Councilors, both for and against the measure, expressed trepidation over the extension through 2021, saying the banking giant’s financial support of the Dakota Access Pipeline and fraudulent retail account-creation practices suggested a corporate culture that does not align with the community’s values.

But, by a 6-3 margin, the council ultimately swallowed that discomfort and accepted a recommendation from city finance staff that Wells Fargo was best equipped to handle the city’s banking, treasury and investment functions, including the management of roughly $210 million in city accounts and some $560 million in annual transactions.

On top of that, councilors acknowledged Wells Fargo has a significant community presence, with seven branches in Santa Fe that employ some 90 local workers, with sizable investments with local businesses and residents.

Citing the staff evaluation, Councilor Peter Ives said Wells Fargo represented “the logical choice,” if not the perfect choice. Take any large corporation, Ives said, and “chances are you can find something I don’t like about what they have done in the past.”

But, as Councilor Carmichael Dominguez said, “We can’t just put our cash in a cash box in the finance office. We do have to work with these institutions.”

Councilors Signe Lindell, Joseph Maestas and Chris Rivera voted against the contract extension.

“It’s impossible to ignore the national issues, the corporate issues that have occurred,” Maestas said.

Those who voted in favor — including Mayor Javier Gonzales, who called his vote a “reluctant yes” — said variously they appreciated the local Wells Fargo branches’ community involvement and recognized that the bid process had produced no viable immediate alternative for the city’s needs.

“I can’t in good conscience vote no knowing there isn’t a second selection,” Gonzales said.

Gonzales also proposed a new resolution Wednesday that would amend the city’s investment policy to ensure the city’s financial agents won’t invest city money into fossil fuels. The contract extension will be governed by the investment policy, city Finance Director Adam Johnson said, and would be subject to that possible amendment.

The staff evaluation of five bidders for part or all of Santa Fe’s fiscal services ranked Wells Fargo’s bid highest overall. “Wells Fargo does provide the most comprehensive, safe and efficient fiscal service at the best price,” Johnson said.

Councilors’ and residents’ concerns about Wells Fargo’s corporate-level activities were incorporated into the evaluation under a “community initiatives” section, which found Wells Fargo represents more of a local community bank than other bidders.

Kathleen McClure-Wight, a Wells Fargo executive vice president, told councilors she appeared before them humble but confident the bank would continue to be accountable to the city and community.

“We feel very comfortable that what we do every day is in the best interests of the city,” McClureWight said.

The San Francisco-based bank was battered last year by revelations of fraudulent accounts created without customers’ knowledge. Thousands of workers were fired, the bank paid millions in fines and the chief executive eventually resigned.

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.

But perhaps of greater concern locally is Wells Fargo’s financial support of the contentious Dakota Access Pipeline, which last year drew sustained protests from Native Americans, environmentalists and others who said the project would endanger sacred lands.

Wells Fargo has loaned some $500 million to the project. The financial stakes prompted Gonzales and councilors to ask for a broader review of the city’s fiscal agent services and to try to include local options in the appraisals.

The second-ranked bidder, Bank of Albuquerque, does not have much local presence, Johnson said, with only one Santa Fe branch. In addition, that bank’s parent company is based in Tulsa, Okla.

Gonzales said he was “disappointed we didn’t see a stronger presence from the local banking community,” acknowledging the city has greater needs than those local institutions could feasibly manage.

At the city Finance Committee meeting last week, the bank’s regional manager encountered councilors’ sharp lines of questioning about both the pipeline project and the bank’s corporate culture.

Bryan Scott, the manager, told the committee he was “personally very disappointed with things that have happened in other areas of our institution” and added certain company actions did not reflect his values or those of local employees.

In a letter to the council and residents, Scott said the bank has “enhanced our due diligence … to include more focused research into whether or not indigenous communities are impacted and/ or have been properly consulted” as a result of the blowback the bank has faced over its Dakota Access financing.

A task force assembled for the purpose of examining whether the city should create its own public bank recently met for the first time, and a report on its findings must be delivered to the full council by the spring.

Any move toward a public bank in Santa Fe could still be years away. But either the city or Wells Fargo can terminate the fiscal agent contract by providing written notice at least 60 days prior to the date of termination in 2021.