The City of Seattle no longer wants to bank at Wells Fargo. Driven by the fact that the bank is helping fund the Dakota Access Pipeline–and the bank’s fraudulent account scandal that surfaced in 2016–the Seattle City Council passed a bill to pull its money out of Wells Fargo when its current contract expires in 2018.
The city already had a law to consider socially responsible business practices when choosing a bank, but now those criteria will be stronger. The bill also specifically directs the mayor to give notice to Wells Fargo that the city won’t renew its contract. The mayor has indicated he’ll sign the bill.
“Recently, in light of legal findings against Wells Fargo, and because of concern about Wells Fargo’s participation in DAPL, people started asking, why is it that our socially responsible banking practices didn’t catch this?” says Lisa Herbold, a city councilmember. “This is a bank that has broken the law.”
In September 2016, news hit about the bank opening as many as two million fake accounts since 2005, leading to $185 million in fines.
In reaction to that scandal, the City of Seattle stopped negotiating with the bank over a $100 million bond deal. The new bill goes further to end the banking relationship completely.
Over a year, the city cycles around $3 billion through the bank, from parking ticket revenue to the city’s payroll. It’s a fraction of $1.3 trillion in deposits that Wells Fargo collected in 2016, but it’s meant to send the bank a clear message.
“At the very least, we ensure that our practices are consistent with our values,” says Herbold.
The bank is one of 17 lenders directly funding the construction of the Dakota Access Pipeline, providing $120 million out of $2.5 billion borrowed by Energy Transfer Partners, the company behind the construction. They also provided even more money in lines of credit and bonds to the various parties behind the pipeline; according to Food and Water Watch, a total of $467 million.
After widespread opposition to the pipeline grew, the largest bank in Norway pulled money out of the project. A Dutch bank that isn’t directly funding construction, but works with the parent company of Energy Transfer Partners, has threatened to end the relationship if the company can’t reach an acceptable solution with the Standing Rock Sioux Tribe. Wells Fargo hasn’t followed suit.
The bill, which forbids city contractors from engaging in “unfair business practices,” notes that Wells Fargo has also been subject to additional enforcement orders because of engaging in illegal private student loan practices, an illegal kickback scheme with a title company, and failing to offer veterans the correct mortgage rates. The bill bars contractors who break the law from bidding for five years.
It also makes it easier for the city to choose a more socially-responsible bank by increasing the value of the socially- responsible business criteria the city uses to weigh future contracts. Herbold says that multiple banks, including some based in Washington and the Seattle region, could be more likely to compete in future bidding with the change.
“Many of those banks have not competed in the past,” she says. “The hope is that by making good banking practices worth more in the bidding process, they’ll be more likely to throw their hat in the ring.”
While Seattle’s move won’t end the Dakota Access Pipeline project on its own–and the Army Corps of Engineers is on the verge of approving the easement to build the pipeline near Dakota Sioux land–it could have a meaningful impact on lenders if other cities follow its example.
“I think what will be really interesting to see is whether or not other cities take similar actions as ours,” she says. “I think the ability of our action to impact what’s going on around the pipeline really is dependent on whether or not other cities are taking a look at how their money is being spent.”