While the city of Santa Fe encourages people to shop and invest locally, the largest chunk of taxpayer money held in city accounts is deposited at Wells Fargo, part of a big Wall Street bank that has been under scrutiny for fraudulent account practices. Wells Fargo also has been one of the financial backers of the controversial Dakota Access Pipeline.
In an effort to spread around the $210 million in various city accounts to community banks and credit unions, the city has put out a request for proposals for banking services. In grading the proposals, city officials will consider community reinvestment practices, local employment and financial education.
Bonus points will be awarded to institutions based in Santa Fe.
“We have a fiduciary responsibility to make sure that taxpayer dollars are safe and invested back into our community as much as possible,” said Mayor Javier Gonzales. “Our financial partners need to have a stake in our community.”
The city’s banking agreement with Wells Fargo ends Dec. 31, and the request issued by the city Finance Department allows for a menu of banking and finance services, with the smaller chunks aimed at attracting a more diverse group of providers.
For instance, one bank or credit union might provide savings/checking and credit card services, while another might handle escrow services or electronic payments. Wells Fargo currently provides services in several categories, said Christina Keyes, the city’s treasury officer.
Wells Fargo has been under increasing federal government scrutiny since bank branches were accused of trying to boost profits by opening more than 1.5 million sham accounts and sending credit cards to customers who didn’t request them. The publicly traded, San Francisco-based company has agreed to pay $185 million in fines to settle the allegations and has said an internal investigation resulted in the firing of some 5,300 employees who were involved.
“Some customers noticed the deception when they were charged unexpected fees, received credit or debit cards in the mail that they did not request, or started hearing from debt collectors about accounts they did not recognize,” The New York Times reported.
In a statement about the city’s request for proposals, city spokesman Matt Ross said there were “concerns from community advocates in favor of public banking and opposed to institutions which back projects that are perceived as threatening to the environment.”
But the city’s goal of attracting new banking partners may not come to pass. One local bank executive said the contract is most likely to remain with Wells Fargo because of the reserve requirements specified in the bid request.
“The city would prefer that the total of the city’s assets held at the fiscal agent bank constitute less than 10 percent of the banks’ total assets,” according to the city’s request for bids.
Even for the largest locally owned bank in Santa Fe, Century Bank, which has assets of $800 million, that would be difficult.
A local credit union executive echoed that, saying it takes in deposits and then lends the money to members and others who need personal loans as well as other financing for credit cards, mortgages and vehicles.
Even with assets of $161 million, Guadalupe Credit Union does not have the collateral to meet the city’s deposit needs, said the president and chief operating officer, Winona Nava.
“Most of our money is loaned out,” she said, “so we don’t have a lot of the illiquid investment assets they would need for us to compete.”
The effort to broaden banking services also is a result of a public banking push by a nonprofit community group, which wants to bring more accountability and transparency to how tax money is invested.
Councilor Renee Villarreal still wants to move forward with the implementation of a public bank so the city can finance its own capital projects, but that effort could take years.
