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City Of Berkeley Plans To Pull $300M Out Of Wells Fargo

City Of Berkeley Plans To Pull $300M Out Of Wells Fargo

In what may be the most damaging blow to Big Banks since the overwhelming success of Bank Transfer Day in late 2011, the City of Berkeley recently announced its intention to withdraw all financial assets from Wells Fargo.

On Tuesday night, the City Council voted unanimously to find a more socially-minded institution to hold approximately $300 million in city assets. Council members said that they hoped the decision would send a very strong message to the Big Banks ultimately responsible for the housing crisis that sent the economy spiraling.

“I feel that this is one way in which we can make a statement and push for wider changes and promote better banking practices and more equity in our society,” Councilmember Jesse Arreguin told a local ABC news outlet.

In preparation for this major financial migration, the City of Berkeley is searching for a local credit union or community-based bank that can handle the payment collections, revenue sharing, and sophisticated money transfers its requires.

While credit unions and smaller banks can normally offer all of the same financial services, unique arrangements might have to be made in order for them to collateralize such a large amount of assets, since they don’t usually carry that much FDIC insurance.

As might be expected, the local Wells Fargo branch was shocked and somewhat defensive following the City Council’s announcement.

“Over the past three years, Wells Fargo has donated more than $3 million to 89 nonprofits in Berkeley… And less than two percent of homeowner-occupied loans in our servicing portfolio have proceeded to foreclosure sale,” said Wells Fargo spokesman Ruben Pulido.

While that may be true on a local level, there is no denying the dubious actions of the Wells Fargo corporation:

  • Wells Fargo was a significant player in the subprime crisis. In 2006, the last year before the subprime bubble started to burst, Wells originated or co-issued $74.2 billion worth of subprime loans, making it one of the top subprime lenders in the country.
  • As recently as September 2008, Wells still held $48 billion worth of subprime mortgages in its servicing portfolio, making it the nation’s sixth largest subprime servicer.
  • Despite its large portfolio of at risk mortgages, Wells Fargo has started trial mortgage modifications for only 11% of its 292,515 borrowers who are eligible for the Obama Administration’s Making Home Affordable Program (and are at least 60 days past due). At Wachovia, which Wells Fargo acquired in 2008, the number is even lower, 2% of 74,231 eligible borrowers.
  • Wells Fargo put taxpayers on the hook for up to $36.9 billion in bailout funds and programs plus an unknown amount from the Federal Reserve’s $8 trillion in emergency programs. This money was supposed to help the banks get the economy going again. But little of this money has gone to relieve struggling homeowners and increase the flow of credit to small businesses (bullet points sourced via SEIU).

In my opinion, the City of Berkeley is to be applauded for its decision to take bold action against the Big Banks, many of which have yet to face any significant consequences for their negligent and often illegal actions. Let the politicians form their task forces and sub committees. In the mean time, intelligent citizens like those on the Berkeley City Council will continue to take action in the most powerful manner possible: voting with their dollars.

Related Reading:

Wells Fargo CEO Mic-Checked By Student [Video]

Department Of Justice Targets Wells Fargo For Discriminatory Lending

Wells Fargo Settles Mortgage Investigations In 8 States for $25 Million

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Image Credit: Flickr - MoneyBlogNewz

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121 comments

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9:47PM PST on Feb 13, 2012

Now Berkeley needs to form their own "Bank of Berkeley". Ala Bank of North Dakota, Ala the state bank J Brown said could be studied at the legislative level, then changed his mind. Don't you just love politicians?

2:44AM PST on Feb 8, 2012

Too bad we couldn't bring down all the big criminal banks.

1:01AM PST on Feb 8, 2012

FANTASTIC! Wish more would follow Berkeley's example. It is the only thing these banks will understand.

5:35AM PST on Feb 7, 2012

THANKS

3:20AM PST on Feb 7, 2012

Noted!Thanks!

11:48PM PST on Feb 6, 2012

this is just awesome, an entire town sticking together to help each other, there is strength in numbers, that's for sure and oh, how times are changing! I remember when Chase kept charging the most ridiculous fees, you couldn't win, but people fought it, and they have won! To believe, to persever, to go through the right channels, hire lawyers, you want to give up 100 times, but you don't!! You continue until you have made the world a better place!!!! You have done it citizens of Berkeley. What an inspiration, and Beth what a great story!!.

8:34PM PST on Feb 6, 2012

"In preparation for this major financial migration, the City of Berkeley is searching for a local credit union or community-based bank that can handle the payment collections, revenue sharing, and sophisticated money transfers its requires."

This is why they didn't make the move long ago, and why all cities aren't jumping to switch to local banks. Local banks and credit unions, take notice: make sure you have the procedures in place to handle cities and other organizations when they come to you, and everyone will benefit!

8:33PM PST on Feb 6, 2012

Wells Fargo was good to me but I'm glad I'm not with them now.

I said something nice to a teller at Chase and he gave me the "You are sooo naive! look."

8:30PM PST on Feb 6, 2012

i cant believe he actually said we've done plenty to help the community by donating $3 million over the past 3 years to charity and non profits. thats like not even half of a tax write off for them. their dealing in billions and billions of dollars anually. for the average joe working 40 hrs a week at 15$ an hour, that would be like giving away $300 over 3 years haha its nothing to them. those ceo's have personal jets that cost more than $3 million

3:58PM PST on Feb 6, 2012

Ruben Pulido, please know the company you are working for and stop being blind to what WF is and has been doing to millions of Americans throughout our country.

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