The Middletown Press (Middletown, CT)
City moving cash from accounts with Wells Fargo
Rating downgrade sparks action as protesters decry bank’s pipeline investment
NEW HAVEN — The city has moved three of its accounts out of Wells Fargo and will put out a request for proposals to move its two large operational accounts to other financial institutions.
It was urged to do so because of the bank’s large investment in the Dakota Access Pipeline, but now there is another reason to transfer those accounts.
The Office of the Comptroller of the Currency has downgraded Wells Fargo’s rating under the Community Reinvestment Act to “needs to improve.”
The OCC found Wells Fargo had an “extensive and pervasive pattern” of discriminatory and illegal lending practices for years, according to a news report by Bloomberg.
The examples referred to by the OCC specifically listed “treatment of minority neighborhoods, military personel and women who had recently given birth,” Bloomberg reported.
Wells Fargo has now been deemed a “non-qualified public depository,” which under a Connecticut statute means it is not eligible to receive public funds.
The OCC, in its report, said the bank’s actions reflect “an extensive and pervasive pattern and practice of violations across multiple lines of business within the bank, resulting in significant harm to large numbers of consumers.”
A spokesperson for the state Banking Department said it passes on the OCC reports to the state
treasurer every January, which is why that 2017 ruling was delivered this January.
The OCC report covered Wells Fargo’s Community Reinvestment Act actions from 2009 through 2012. The company has said over the past six years it has greatly improved the number of loans to minorities in poor communities.
Activists have been lobbying the city for sometime to take its money out of Wells Fargo because of the pipeline near the Standing Rock Reservation in North Dakota and on Thursday they drew attention to its investment in the Bayou Bridge pipeline in Louisiana being built by Energy Transfer Partners.
Melinda Tuhus, who led the small rally in front of City Hall on the issue, said that was halted on Feb. 23 by a temporary restraining order issued by a Louisiana federal district judge, but it is another reason to pull out of Wells Fargo.
The bank has had other scandals, including when staff, under pressure from supervisors, opened more than 2 million fake bank and credit card fee-generating accounts. It has agreed to pay $185 million to customers to make amends.
The bank last month said “it entered into a consent agreement with the Board of Governors of the Federal Reserve System to improve risk management, compliance and oversight.”
In a message to customers, CEO and President Tim Sloan said, “Wells Fargo still has work to do. Yet we are a better bank today than we were a year ago, and we become better and stronger each day. Thank you for doing business with Wells Fargo. Our top priority remains earning your trust each and every day.”
At the rally last week, about 15 people walked the half-block to the Wells Fargo branch at Elm and Church streets, chanting, “Say it loud. Say it clear. Get our money out of here.”
Geremy Schulick, another activist, said there is no timeline for withdrawing the money from Wells Fargo, but “it is amazing news and a huge step forward for our campaign. He added however, “it is by no means the end of it.”
Schulick said the goal was never that limited.
“It was about New Haven switching to a more ethical, more local bank that did not fund the Dakota Access Pipeline,” Schulick said.
He said other big banks, such as Chase, TD Bank and Bank of America, also put millions into the pipeline project. Schulick said some banks are also high on a list of funders of fossilfuel projects, particularly Chase.
He said transferring money to Chase would not be a win for their campaign.
Among the local financial institutions they favor are: Start Bank, a community bank; People’s Bank; and Connex, a credit union.
City spokesman Laurence Grotheer said the transfer of these complex accounts could take months.
Last September, city Controller Daryl Jones said there are four main operational accounts, where some $11 million in city funds flow through on a daily basis.
He said they cover such things as payroll, capital funds and special funds from grant sources.
At that time he said it would take a minimum of six to eight months to change banks for these accounts, a decision that would trigger hundreds of other operational and legal steps. He said the request for proposals will determine what banks are interested in the city’s business.
Jones said some of the remaining 26 accounts could be moved more quickly and he would ask staff to investigate changes for three to four of them at a time.
Jones said any changes would require a methodical review by what is essentially a skeleton staff in his office. Overall, he said the accounts total around $200 million.
Jones said some banks are not in the mix because they are limited in what they can do. The controller said it is also important to establish a relationship with any bank they chose that guarantees they can pick up the phone and get something done on a timely basis.