Divest LA Statement – Budget and Finance Committee Meeting

Photo: Divest LA with Alliance of Californians for Community Empowerment and Committee for Better Banks.

In continuous victory for the Divest LA movement, LA City Council takes a progressive leap forward in the banking services Request for Proposal (RFP) contract. After 8 months of hard-hitting legislative advocacy, policy writing, and lobbying, the City’s RFP drafted contract will move into full Council with significantly strengthened Social Responsibility (SR) criteria through the use of an Alternative Scoring System that will now weigh SR on a 30-point scale.

In yesterday's Budget and Finance meeting, Councilmember Krekorian commended the Movement on our work and contribution, stating that we were implemental in the City's creation of the most socially responsible banking contract in the nation!

To view a recording of the meeting, check out Madeline's livestream on ActivateNow.

The Alternative SR scoring system will take into account a bank’s enforcement actions, community lending, community investing, and bank services. The 30-point scoring system is far bolder and more progressive than other cities including: Seattle which weighs social responsibility at 15-points, and San Francisco at 5-points.

We presented our environmental amendments to both the Office of Finance and the Budget and Finance Committee. The Committee has now instructed Finance to further research and report back on incorporating environmental criteria, the use of a third-party Environmental, Social, Governance (ESG) rating agency, and disclosure of predatory sales goals.

In June, LA City Council voted unanimously to divest $40 million in holdings from Wells Fargo. The City also moved to break up over 800 Wells Fargo accounts. The Office of Finance has now confirmed that most of the $40M will be divested within the next 2 to 4 months, with a remaining $10M to be sold shortly thereafter. Instead of our city money sitting in one too-big-to-fail bank, 800 Wells Fargo accounts will now be distributed to 12 banks with one primary and one secondary bank in each service category.

Divest LA is continuing the fight against Wells Fargo and greater bank accountability by advocating that the City’s Responsible Banking Ordinance (RBO) also reflect the social responsibility measures in the RFP. We are also asking the City to enforce the Federal and State CRA rating of Satisfactory as a qualifier in the RBO. In addition to commercial banking services, this will automatically prevent Wells Fargo and other disreputable financial institutions from submitting services for the City’s investment banking services.

Upon the full council vote, Wells Fargo will officially be DISQUALIFIED from the City’s RFP for commercial banking services. In addition to their disqualification, the movement will implement a much more strengthened ethical framework in which banks handling our public finances must adhere to.

Stay tuned for updates on the FULL COUNCIL RFP/Divestment vote which is scheduled to take place within the next two weeks! #FareWellsFargo!!!

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