The UC Berkeley student government’s ideologically driven plan to transfer its $3.5 million in funds to a new bank is nearing completion, ASUC officials said Wednesday.
The effort, which involves transferring all of the ASUC’s funds in Bank of America to Union Bank, is expected to be completed in October and represents a major change in the association’s finances.
Andrew Albright, who co-sponsored the original bill calling for the transfer last spring when he was an ASUC senator, said his motivation for finding a new business partner was Bank of America’s lending practices, including its acceptance of bailout funds and what he said was wrongful involvement in the subprime mortgage crisis.
The bill, which initiated the switch last spring, was consistent with themes from the Occupy movement that took the campus by storm last fall and in part emphasized divestment from big banks.
“At Bank of America, we weren’t a priority to them,” Albright said. “Union Bank so far has been very good to us.”
Bank of America has donated nearly $1 million to the UC Berkeley School of Law for environmental climate initiatives, among other donations, bank spokesperson Colleen Haggerty said in February when the ASUC began investigating the move.
Before selecting Union Bank as its financial partner, the ASUC looked into supporting smaller local banks and credit unions, including CUBS, the credit union for UC Berkeley students, faculty and staff. Officials opted for security when they chose the relatively large Union Bank so ASUC funds wouldn’t make up as large a percentage of an institution’s total holdings, Albright said.
Tito Ibarrola, a senior manager at Union Bank, outlined the bank’s corporate responsibility practices for senators at the meeting, including extensive community investment in Alameda County and a pledge to use 2 percent of its profits for community projects. He also said that Union Bank did not receive funds from the federal government’s 2008 bailout plan, the Troubled Asset Relief Program.
“We weren’t participating in subprime lending when it was fashionable,” he said.
However, the change is more than ideological. According to Marilyn Stager, financial services manager of the ASUC Auxiliary, the student government had many different types of accounts with Bank of America, such as money market accounts, certificate of deposit accounts and checking accounts. With Union Bank, the ASUC will be depositing the entirety of its $3.5 million into a single account — a checking account — for which it will not generate interest.
In order to maintain a competitive rate of return in the absence of gains from interest, the ASUC will collateralize the funds in its checking account, which makes them eligible for different types of earnings. These actions, Stager said, should keep rates of return at or above former levels.
Jeremy Gordon covers student government. Contact him at [email protected].