After much soul-searching about community values, and following four and a half months of research, interviews and evaluation, the city of Santa Fe is going to put its money where its mouth might not prefer it to be.
The city’s Finance Committee voted Monday night to recommend the city continue its financial services contract with Wells Fargo. SFR reported last month that the recommendation was in the works. The measure now goes to the full City Council for a vote next week.
Wells Fargo will earn about $141,000 for the next fiscal year, a roughly 20 percent increase that in part reflects more financial transactions demanded by the city.
The city’s financial staff worked to craft an unusual request for proposals that let local banks leverage their strengths while writing off their weaknesses. Banks were allowed to throw in for all the city’s business or only certain parts of it. Still, the breadth and depth of what Santa Fe and its 84,000 residents needed from a bank meant that only five financial institutions responded, and only two were true local banks.
The two New Mexico-based institutions, Century Bank and Los Alamos National Bank, applied for part of the city’s business. New Mexico Bank and Trust and Bank of Albuquerque—both of which are owned by out-of-state parent companies—joined Wells Fargo in submitting responses for the full suite of financial services desired by the city.
Last spring, Mayor Javier Gonzales was vocal in his desire for a review of the city’s contract with Wells Fargo, saying the city needed a bank that had “a social responsibility policy that matches the values of Santa Fe, and a history investing in our community and economy.”
While opening up the bidding for the city’s business resulted in a contract with the same financial institution that made headlines for financing the Dakota Access Pipeline and creating thousands of fake accounts for customers to boost its numbers, councilors seemed pleased with the process, if not thrilled with the result.
While Wells Fargo scored well in the part of the bidding process that rated community initiatives both councilors Carmichael Dominguez and Renee Villarreal questioned bank executives about their commitment to building the local community.
“You can donate and give as much money as you want, but that doesn’t mean you’re not part of the problem,” Villarreal told Wells Fargo Regional Manager Bryan Scott. The councilor said it was sometimes difficult to separate what the bank has done to grab headlines with the support it pledged for the community.
“Personally, I’m very disappointed with some of the things that have happened in our institution this past year,” Scott told the panel. He pledged continued volunteer efforts from the bank’s 94 Santa Fe employees. “What you’re seeing and reading in the papers is not indicative of the culture and the commitment that we have to your community.”
Dominguez questioned the bank’s willingness to serve less wealthy Santa Feans. While he agreed to send the recommendation on to the full City Council for debate, he asked the bank to map out how many branches it had in or next to low- and moderate-income neighborhoods.
“I want to make it clear that when we talk about community values … that we take it very seriously here,” Dominguez said.
Scott couldn’t answer Dominguez when he asked if Wells Fargo trained its employees about implicit bias, but local Wells Fargo executive Sharen Ramirez said such training is part of what local employees go through.
“We do know,” Ramirez told the committee, pausing to gather herself. “The first time I took [the training] I did not pass. And as a native New Mexican I was shocked.”
While the recommendation means more than $200 million in city business will go to a bank headquartered out of state, the city’s finance director said the review has opened up relationships with local banks.
“This was a very enlightening process, I think, for our staff,” Adam Johnson told councilors. “It brought up a number of opportunities which we’re currently pursuing with local banks.”
The city has pledged to put more money into certificates of deposit if local institutions say they need cash for loans. And, Johnson said, the city is looking into opportunities to sell bonds for smaller city projects directly to local banks as long as they can get rates that are competitive to what the bonds would go for on the open market.
Local banking advocates seemed to take the recommendation in stride.
“It is unfortunate that the city does not have local options available to them, and we hope that in the future they will have such options available,” George Gamble, a board member for Banking on New Mexico, tells SFR.
Gamble says even if the city decided today to start a public bank and handle most of its own finances, it could take years to ramp up the business. Still, he sees tremendous benefits to keeping the city’s money local.
“It would focus the use of local dollars on local projects, so that rather than being invested in a bank like Wells Fargo, which invests all around the world, we would look to invest locally in both public and potentially private development projects,” Gamble says, listing moderate-income housing, fiber optic internet access and student loans as three such projects.