The City has officially split with Wells Fargo over funding for the Dakota Access Pipeline. On Tuesday, the City Council made the final vote to divest from the bank and submit a request for proposal from a new financial institution large enough to deal with the City’s billion-dollar annual banking transactions.
Counclimember Tony Vazquez, who brought the motion to divest from Wells Fargo before the council last month, also cited Wells Fargo’s past practice of secretly opening unauthorized accounts for customers as a reason to break ties with the bank. In September, the Consumer Financial Protection Bureau (CFPB) fined the bank $100 million for the practice.
When opening a new account, City staff will not consider any bank that has been cited by the CFPB or another regulatory agency that protects consumers from improper sales practices.
About a dozen activists attended Tuesday’s City Council meeting in support of the divestment. Many identified themselves as Native Americans or protesters who had been to Standing Rock themselves.
Shortly before the City Council formalized the divestment, President Donald Trump told Congress he had cleared the way for construction of the Keystone and Dakota Access Pipelines. Back in January, President Trump signed an executive order to expedite environmental reviews of the projects.
A spokesman for Wells Fargo has called the divestment an empty gesture, saying it will not affect plans to construct the pipeline. The bank is just one of 17 that provided $2.5 billion in credit to Energy Transfer Partners. Wells Fargo maintains it cannot break its contract to help finance the pipeline.
In its rapid divestment from Wells Fargo, Santa Monica has lost money. Immediately selling bonds with the bank valued at $4.6 million resulted in a loss of $120,000, according to a recent report from the City’s finance director. Fully divesting from the bank will take about a year.
To Councilmember Terry O’Day, the losses underscore the importance of the message behind the divestment.
“What I’ve heard from the lenders to the Dakota Access Pipeline, is that they might incur some cost if they were to break their contracts in funding the pipeline,” O’Day said, “and we’re here tonight saying we’re willing to take some costs to do that and they should as well.”
Along with the divestment, the City Council revised Santa Monica’s investment policy to prohibit investing in institutions that provide financing to fossil fuel companies, along with the fossil fuel industry itself.