The city of Berkeley, CA, known for its radical politics, is considering whether they will divest city funds from Wells Fargo in light of the bank’s role in the foreclosure crisis. On Tuesday, according to the Oakland Tribune, the City Council unanimously passed a resolution calling for the City Manager to consider moving city funds into a community bank, credit union, or Community Development Financial Institution (CDFI.)
Berkeley City Council members Darryl Moore and Jesse Arreguin introduced the recommendation, titled “Responsible Banking Policy,” during Tuesday’s meeting. The recommendation asks that the City Manager examine “the fiscal and operational impacts of not renewing [the city’s contract] with Wells Fargo Bank and contracting with an alternative bank”; “Evaluate…alternatives to banking with Wells Fargo”; and “review City banking and investment practices to ensure that public funds are invested in responsible financial institutions that support our community.”
The reason Berkeley does not consider Wells to be responsible or supportive goes back to the bank’s role in the subprime lending crisis and the subsequent recession. Because Wells is the nation’s largest mortgage lender, and because, as the Council recommendation states, the bank “falsified loan documents and pushed borrowers into subprime mortgages with higher interest rates which they could not afford,” the City has resolved to look into alternatives — banks that did not damage Berkeley’s economy, directly or indirectly.
Though not apparently affiliated with the movement, the decision bears resemblance to the Move Our Money campaign that started late last year. Started by a non-profit coalition called The New Bottom Line, Move Our Money seeks to help move $1 billion out of big banks and in to credit unions, working with larger institutions in addition to individuals in order to meet their goal. So far the movement has taken credit for moving $57 million out of big banks.
Other municipalities have divested or pledged to divest from big banks in recent months. Last year in New York state, Hempstead, Binghamton and Freeport all withdrew city funds from big banks. In November, Seattle passed a similar resolution to the one Berkeley passed this week, as have Philadelphia, Pittsburgh and Cleveland. The biggest city in the Bay Area, San Jose, has already divested nearly $1 billion from Bank of America®, and San Francisco has issued an RFP seeking “socially responsible” banking services.
Now that the resolution has passed, Berkeley’s City Manager has until May 1st to bring a report back to the City Council, as per the terms of the document. The Oakland Tribune reports that Berkeley currently has $350 million with Wells Fargo.