grosso

Councilmembers Call for Divestment from Wells Fargo

Councilmember David Grosso, whose office wrote the resolution

The City Council wants DC to reconsider its relationship with Wells Fargo Bank. That’s according to a resolution introduced by Councilmembers David Grosso (AL), Anita Bonds (AL), Elissa Silverman (AL), Brianne Nadeau (Ward 1), and Charles Allen (Ward 6) last month.

Wells Fargo handles the city government’s banking needs as the city’s bank of record, with billions of dollars in its account.  But in their statement, the councilmembers expressed skepticism that Wells Fargo was meeting its obligations to the communities it serves and called for the District to “reassess its existing relationship with Wells Fargo and consider greater investment in local banks to support community growth.”

Their statement listed concerns about Wells Fargo’s history of racially discriminatory lending practices, its funding of private prisons, and its role in financing the Dakota Access Pipeline. That pipeline was rerouted through the drinking water of the Standing Rock Sioux Tribe in part because it was deemed by the EPA to be too dangerous to pass through predominantly-white Bismark, ND’s water supply.

Wells Fargo has also made news in the past year with revelations that thousands of their employees opened millions of false accounts using customers’ information. According to past employees, this was driven by unrealistic sales requirements and a toxic corporate culture. In September of last year Wells Fargo settled with federal regulators for $185 million.

In part because of this, Wells Fargo’s score under the Community Reinvestment Act (CRA), a piece of legislation designed to monitor and encourage responsible banking in low- and-moderate-income communities, was recently downgraded to a “needs to improve.” This is a failing grade under the CRA ratings, a rare occurrence under a system some advocates have described as being too lenient.

Between 1990 and 2007, an average of only 4 percent of banks each year received a failing grade on their CRA exam.

In their report, federal regulators also referenced Wells Fargo’s history of racial discrimination in lending and other improper lending techniques.

Wells Fargo, for its part, claims its problems are now in the past and that it has taken concrete steps to improve its community services. In a statement after their federal settlement, CEO Tim Sloan declared that Wells Fargo is on a “journey to make things right with customers and rebuild trust.”

DC councilmembers, however, remain unconvinced.

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