Socially Responsible Banking Legislation
I’ve received around 1400 e-mails, and hundreds of phone calls, regarding socially responsible banking legislation before a City Council committee next week. Here’s the reply I’ve been sending out:
Thank you for writing to me about Council Bill 118833, strengthening Seattle’s socially responsible banking laws, and encouraging the Mayor and Director of Finance and Administrative Services (FAS) to end the City’s banking relationship with Wells Fargo. I support this bill, especially considering that senior management at Wells Fargo directed employees to engage in fraud, for which Wells Fargo was fined $185 million by federal and local regulatory bodies.
Councilmember Burgess, Chair of the Affordable Housing, Neighborhoods and Finance Committee, announced this week that the bill, as well as a possible alternative that he would propose, would be heard at the February 1 meeting.
The Director of the Department of Finance and Administrative Services (FAS) has the power to “select qualified public depositories for the deposit of City moneys as contemplated by RCW Chapter 39.58” through an open bidding process. Council Bill 118833 would amend the City’s socially responsible banking practices (SMC 20.65.010A) to require banks seeking to do business with the City to disclose whether they’ve engaged in dishonest or unethical business practices within the last five years. Under the City’s existing socially responsible banking laws, the Director of FAS has the power and duty to require banks provide the City with data on socially responsible banking practices when they are bidding to be selected as the City’s bank. The data provided by the banks on their socially responsible practices is then used to rate the bank in the City’s selection process.
I plan to propose an amendment to amend the section of the socially responsible banking law (SMC 20.65.010B) that defines “socially responsible bid criteria” to explicitly include “engaging in fair business practices.” This provision is not explicitly included in the proposed bill. Its inclusion will ensure that FAS specifically consider this criterion in selecting the City’s bank.
In addition, the legislation also encourages the Mayor and FAS Director to include socially responsible banking as a factor worth at least 20% (it is currently worth 15% in the Socially Responsible Banking ordinance passed by the Council in 2013, sponsored by former Councilmember Licata).
Finally, the legislation encourages the Mayor and Director of FAS to provide Wells Fargo with notice of intent to not renew the current contract for a 5-year extension; to undertake a new competitive bidding process to establish a new, qualified financial institution for banking services by no later than December 31, 2018. The City’s current contract with Wells Fargo goes through the end of 2018.
Integrating social responsibility with the City’s banking needs, and relevant state law, is challenging. State law limits the use of credit unions to $250,000, which means we can’t use them for general-purpose banking.
My office asked FAS about relevant regulations, and they sent me the following information:
“State law strictly limits which banking firms the City can hire. State code (RCW Chapter 39.58) requires banks serving the City to have collateral equal to the City’s total deposits. This collateral amount, however, must be free and clear from most any other collateral requirements the bank has under state or federal law. In addition, state law limits a bank’s total deposits from its local government customers to no more than the bank’s total net worth in the state of Washington and no more than 150 percent of its net worth worldwide.
There are additional technical requirements the City places on its bank vendor, including the capacity to process up to $450 million in deposits, robust overdraft protection and an adequate number of branches to serve the City’s 80 payment centers. Currently, these and other restrictions limit the banks that can provide banking services to the City to a handful of the nation’s largest banks.”
During the City’s previous open bidding process during 2012, only four banks submitted proposals and met mandatory qualifications and minimum requirements: Wells Fargo, Bank of America, US Bank, and Union Bank. Two of these banks have significant direct investments in the Dakota Access Pipeline; two have significant investments in companies involved in the pipeline (Bank of Tokyo Mitsubishi is the parent company of Union Bank).
Bank of America and US Bank, as well as Wells Fargo, all received significant fines from the Department of Justice for mortgage fraud. This points to the challenges we face in selecting a bank for City depository services.
My office has asked FAS which of the 63 banks would be eligible for Seattle’s banking contract, and other questions, in order to gain a more complete picture of Seattle’s overall banking situation, and which banks might be eligible for Seattle’s depository services.
Regardless of the limits we may face, strengthening socially responsible banking principles is a good step.
Seattle Public Utilities Strategic Business Plan Meeting Announcements
Seattle Public Utilities (SPU) is in the process of updating its Strategic Business Plan (SBP), the roadmap that guides their investments and service levels. Additionally, this document, which is updated every three years, is the guide for the utility’s rate path. The first SBP, passed in 2014 and linked here, outlined a 4.6% average annual increase which is reflected in the core services provided by SPU: drinking water, drainage, sewer, and garbage and recycling.
During the development of the original SBP, customers had an opportunity to provide feedback at focus groups, public meetings, and via online surveys. They are now asking for your help to update the existing plan, which will affect your rates and your SPU bill. Please consider attending a community meeting and sharing your thoughts and experiences with SPU.
Onyx Arts Exhibit at King Street Station
In the Civil Rights, Utilities, Economic Development and Arts Committee that I chair, each month we have a “Cultural Spotlight” feature, where Office of Arts and Culture selects a local arts organization to present at the beginning of the committee meeting.
Earlier this week, Onyx Fine Arts presented. They are an all-volunteer groups of artists and supporters committed to seeking out and promoting visual artwork of Pacific Northwest artists, both known and unknown, principally from the Pacific Northwest.
Their “Truth B Told” exhibit is currently featured at King Street Station exhibition space on the 3rd floor, at 303 South Jackson, through February 4. Admission is free. It is open 3-8 p.m. on Fridays, noon-6 on Saturdays, and during the Pioneer Square First Thursday Art Walk next week. A Seattle Times article reviewed the exhibit last week.
Myers Way Homeless Encampment Community Meeting
On Wednesday, February 1, 2017, at 7pm, the Director of Homelessness, George Scarola, will facilitate a community meeting with the Highland Park Neighborhood at the Joint Training Facility about the Myers Way Encampment. This is an opportunity to ask questions and learn more about how the Mayor’s Office intends to implement the City Council requirements for the creation of a community advisory committee, an encampment operations plan, and resources that will be available to meet both the encampment residents and the neighborhood needs. The Emergency Order allow this encampment to operate for 12 months with an option to renew for an additional 12 months.
As discussed in last week’s blog post, the Council approved the Executive Order to stand up three new encampments. The new encampments make up one component of the Mayor’s Bridging the Gap to Pathways Home Initiative, which is the action plan to better address the immediate needs of people living unsheltered.