On the heels of the Occupy Wall Street movement’s anger regarding the role banks played in the economic downturn, some officials are urging The City to move its money or even consider establishing a bank of its own.
Ideas for moving The City’s money to smaller banks were presented Wednesday at a hearing of the Budget and Finance Committee of the Board of Supervisors. Backers of the effort said they are seeking socially responsible financial institutions that invest in affordable housing and small business, and prioritize modifying mortgages to avoid foreclosures.
This reconsideration of The City’s banking relationships comes as the city of Berkeley attempts to cut its ties with San Francisco-based Wells Fargo over disagreements regarding that institution’s corporate values. The East Bay city also is auditioning new financial institutions that prioritize local investment.
Supervisor John Avalos, the sponsor of legislation that would require the Treasurer’s Office to examine such banks, said his proposal “will help to get the ball rolling” on support for a municipal bank in San Francisco. According to his legislation, The City — which maintains nearly 200 accounts with Wells Fargo, Bank of America and Union Bank — has not shopped for a new financial institution in nine years.
Treasurer Jose Cisneros told the committee his office is figuring out what questions The City should ask in seeking to audition potential new financial partners. One line of questioning would ask about the bank’s level of participation in the subprime lending that helped contribute to the housing meltdown of 2008.
Cisneros said while it’s unlikely The City will ever be able to control exactly how its banking partners invest their money, general ethical principles could be established via a questionnaire.
State law currently prohibits counties from loaning money to individuals or companies, but San Francisco could spread its wealth around federally insured credit unions or community development banks to help support their missions. The City would typically invest a maximum of $250,000 in such accounts to qualify for federal deposit insurance.
“What we need is to design an economic strategy for households,” said Avalos, adding that the Occupy movement was merely an expression of concerns that have been building for some time. “Occupy is just the name of what people have been doing the past three years during the financial meltdown.”
Avalos said Assemblyman Tom Ammiano’s office has been approached to draft a bill to change California’s policy, although the deadline to do so during this legislative session is fast approaching.
Supervisor Carmen Chu voted in favor of advancing the legislation to the full board, but cautioned The City should still seek to link up with “sound financial partners” that can provide the best return on its investments.
“I think that’s what our taxpayers demand of us,” Chu said.
San Francisco has money stored in accounts with Wells Fargo, Bank of America and Union Bank.
130 Checking accounts for 40 departments
54 Credit card accounts
$12B Money that moves through accounts annually
10M Individual transactions per year
Source: San Francisco Treasurer’s Office