L.A. City Council Moves Toward Divesting From Wells Fargo - The Los Angeles City Council took a step Tuesday toward divesting city funds from Wells Fargo over the bank's fake accounts scandal and its support of the Dakota Access Pipeline.
The city does the majority of its banking with Wells Fargo through 800 accounts and holds more than $40 million in securities with the company.
The motion approved on a 14-0 vote does not cancel the city's contract with Wells Fargo, but directs the Office of Finance and other departments to report on options for doing so and outline criteria and standards the city would have in any future agreements with banks.
"It's time for us to endeavor to only do business with ethical financial institutions that have high standards and ethical standards. This is a very fiscally sound approach to looking at what divestment will mean, and it's a very complicated and intricate matter," said Councilman Mitch O'Farrell, who introduced the motion with Councilman Paul Koretz.
The motion cites the bank's support of the Dakota Access Pipeline as a reason for the possible divestment, as well as a lawsuit the city settled with Wells Fargo last year after some of the bank's employees created more than two million unauthorized accounts as a way to meet aggressive sales goals set by management. The bank paid $50 million in civil penalties to the city of Los Angeles and $135 million to two federal agencies, and was ordered to provide restitution to affected customers.
The motion states that the city "has historically upheld strong principles protective of the environment and the health and welfare of its residents. Wells Fargo's support of the Dakota Access Pipeline Project is at odds with these principles."
The oil pipeline that runs more than 1,100 miles from North Dakota to Illinois sparked a months-long protest near the Standing Rock Sioux Reservation. Members of the tribe opposed the project because they said it passed over a sacred burial ground and would threaten their water source.
Pipeline construction was halted in November by the Army Corps of Engineers, but President Donald Trump signed an executive order in January instructing the agency to finish the project. Oil has been flowing through the pipeline since March.
The motion directs the Office of Finance to develop a new request for proposals to use when reaching agreements with banks and report back to the council on its wording.
The retooled RFP will include the institution's Community Reinvestment Act score, which tracks a bank's level of lending, investments and services in low- and moderate-income neighborhoods. Wells Fargo's score took a significant hit recently due to the fake accounts scandal.