City of Berkeley could move funds out of Wells Fargo

The Berkeley City Council is considering moving its funds from Wells Fargo into local credit unions.
Gracie Malley/Staff
The Berkeley City Council is considering moving its funds from Wells Fargo into local credit unions.

Distrust of big banks became a common theme of the Occupy movement and inspired thousands across the nation to move their money to smaller credit unions. Now, the city of Berkeley may follow suit.

At its Tuesday meeting, the Berkeley City Council will consider a proposal to move Berkeley’s assets out of Wells Fargo. Eventually, if the city decided to leave Wells Fargo, it would transfer $300 million and would be one of the first cities in the Bay Area to do so — a loud political statement that Councilmember Jesse Arreguin hopes will encourage other cities to do the same.

Tuesday’s item, pushed by Councilmembers Arreguin and Darryl Moore, asks for the city manager to explore possible alternatives to Wells Fargo, such as local credit unions and community banks. The city of Berkeley has had a contract with Wells Fargo since 2004, according to Arreguin.

“That contract is set to expire at the end of this year,” Arreguin said. “Councilman Moore and I felt that we should really look at alternatives to Wells Fargo — particularly credit unions or community banks, a bank which is locally run so we can use our tax dollars to invest in local businesses.”

The Occupy Berkeley movement has been actively involved in contacting city officials about the possibility of moving into local credit unions, according UC Berkeley junior and Occupy Berkeley organizer John Holzinger.

“Obviously, it’s great that they’re doing this,” Holzinger said. “Once it’s finalized, I’ll be much more happy.”

The item, if passed Tuesday, would require the city manager to gather information by May to bring to City Council regarding costs of transferring and possible alternatives that fit the city’s needs. The decision to either renew the contract with Wells Fargo or move to a different bank will then be made at some point in the fall, Arreguin said.

Arreguin likened the move to actions the city took against apartheid South Africa, when the city worked extensively to boycott firms that conducted business in the country.

Now, Arreguin hopes to start a new boycott — this time to send a political statement to big banks as well as to inject money into the community.

“I think it’s taking the principles of the Occupy movement into action,” Arreguin said. “I think things like this are ways in which we can try to change our system of government. We need to take more direct action and action that will actually influence policymakers — influence banks to try to see the kind of changes that we want.”

Arreguin cited Wells Fargo for its record of alleged “subprime lending, predatory lending and lack of investing in communities” — a record he says hurt communities with foreclosures and financial difficulties.

Wells Fargo spokesperson Ruben Pulido said in an email that the bank has long advocated for responsible lending and will continue to work with Berkeley’s leaders to demonstrate the company’s positive impacts on the community.

“I am confident that when current or potential customers compare us to competitors regarding the value and service we provide, and learn about our extensive efforts to strengthen communities where we do business and our team members live and work, we are in a strong position,” he said in the email.

The city last had the choice to renew or end its contract with Wells Fargo in 2009. Though there were discussions of moving out, the city ultimately renewed its contract, deciding to revisit the issue later.

Now, four years after the economic crisis of 2008, Moore and Arreguin are reigniting that conversation. Arreguin said he thinks the renewed interest is a reflection of the changed current political atmosphere.

“I think with the Occupy movement, it’s the right time to move this issue forward,” Arreguin said. “I think there’s a lot of support in the community. Now is the time to raise this issue and move ahead.”

Nevertheless, this is far from final. The city still must decide if credit unions or community banks can meet the city’s banking needs, Arreguin said.

“It is conceivable that in the end of all this that we may just stay with Wells Fargo,” Arreguin said. “I certainly don’t support that, but that is a possibility.”

Jaehak Yu covers city government.