It’s not just individuals and small businesses that are peeved about the way big banks have mishandled the massive amount of foreclosures during the last half-decade. The city government of Berkeley, CA, is looking to pull several hundred million dollars out of its Wells Fargo accounts and plunk the pile down at a more consumer-friendly financial institution.
The Oakland Tribune reports that earlier this week, the Berkeley City Council voted unanimously to look into withdrawing its $350 from the Wells Fargo wagon and finding “responsible financial institutions” upon which to bestow the bundle.
“Wells Fargo Bank … was a key part of the subprime lending crisis which led to our overall economic collapse,” reads a statement from two Council members.
Berkeley’s Mayor even admitted that he recently moved his own money out of WF and to a “community bank.”
He did note that the bank has also loaned quite a bit of money to local businesses and that it has donated millions to charities in the area.
The city’s contract with Wells Fargo ends at the end of the year. The city manager will file a report in May on whether or not to continue that 8-year relationship or to look elsewhere.
Berkeley considers closing its multimillion dollar Wells Fargo account over bank’s handling of foreclosure crisis [Oakland Tribune]
Thanks to Brian for the tip!
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They may have trouble finding a more consumer-friendly financial institution.
How about a locally owned and operated financial institution that will further benefit the local community?
That will just be bought up in a year or two.
“…the Berkeley City Council voted unanimously to look into withdrawing its $350 from the Wells Fargo wagon…” Uh, I think you mean $350 million. It’s a bit of a difference.
Lots of typos today. Another story mentioned Ice Cubs.
not in government, these are the same numbers.
Then again, it’s California (the bankrupt state) and Berkeley. It might well be only $350.
Wow … Wells Fargo’s service fees are high!
hmmm…. I always thought city government had their money in the state treasury or some sort of city government own bank.
Can you provide me an example of a “city-owned government bank” in the U.S?
it just never cross my mind that city government uses regular banks.
Not a city, but North Dakota has a state-owned bank. I’d imagine many municipalities use it.
Even states use regular banks for their treasuries. NJ uses Wells Fargo.
reallly??? i always they they had like a big giant vault like the federal government…
dont tell me the federal government doesn’t have one…
A contract to handle the city’s money? That’s not the proper term. Agreement is a better word. Contract implies that money is being paid to handle the city’s funds. If they are paying money to Wells Fargo to handle their funds, something is already very off.
“handle” might be the incorrect word. There may very well be a contract between the city and Wells Fargo where they received a special interest rate and other benefits in exchange for keeping their funds with Wells Fargo.
Chase charges my dad to handle his sizable retirement fund, and lost $25,000 of it “investing” in shit.
This is Wells-Fargo, not a real bank. So you bet your hiney they’re charging the city for the “privilege” of using WF’s services.
Why don’t cities support their own community banks as a default? Seems like it’s a win-win for the city and it’s citizens.
Larger banks have more wiggle room for bribes… I mean campaign contributions.
Credit Unions are more open with where their money goes, by default and for good reason. So harder for them to “sweeten” palms.
Because for most “small community banks” 350M would be way to much for them. They would have to split it up between mulitiple small banks, even then it would probably be too much money.
What? Did you forget a /s ?
Have a look at how many of the FDIC bank closures in the last 2 years have been small community banks… with $350M being way beyond the FDIC insured amount. It’s the kind of dough where you’d seek a bank that’s “too big to fail”.
Go look at the number of big bank failures as well.
Maybe the local bank would not fail so easily if $350 million were deposited.
Wells Fargo is headquartered in San Francisco, so by using it, Berkeley IS supporting a local bank.
The local bank probably got bought out at some point. LOL watch WF buy out the next bank they use.
I would suggest that first they review their cash-flow, $350 in their account doesn’t leave much room to pay for maintenance and construction of Town facilities.
Hey, $350 in the bank is better than most California cities have.
Not to mention that it’s likely below the minimum required to avoid monthly service fees.
I would like Wells Fargo to consider stop letting the government force them to make loans to poor people. Ironic that a government body is pointing fingers at a bank who followed government requirements to lend to poor people.
Umm…while what you say may be true. There may have been pressure to loan to poor people. I suspect that is because poor people have no money. The issue we are in today has more to do with loans to middle class folks.
The banks could have put them in fixed rate mortgages if they were using their head instead of chasing profits and bonuses.
Ohh..they’re talking about Berkeley…the headline states they’re talking about California City.
http://en.wikipedia.org/wiki/California_City,_California
I always think California City, the actual city with that name, everytime I see a headline like this.
Wait, they’re sitting on a bank account with $350 million in it?! That’s just asking for trouble. Why isnt this money in an investment account of some sort (it may very well be, but the story makes it appear this is a single deposit account). Besides that, unless Berkeley just issued a huge bond, why is a city that small sitting on $350 million? Don’t they have an underfunded pension or something? A city the size of L.A. Shouldnt have $350 million laying around, let alone Berkeley.
Something is missing from this story (and, yes, I clicked through)
…the Berkeley City Council voted unanimously to look into withdrawing its $350 from the Wells Fargo wagon …
Thanks. Now I’m going to be humming that tune from The Music Man all afternoon.
http://www.youtube.com/watch?v=AaT0s6Gx2FI
Even as a proud San Francisco resident, I occasionally roll my eyes at some of the stuff that comes out of the Berkeley city council. But this time I think they’re right on. This is exactly the rare sort of “statement” that can actually have a profound effect on the local economy. Every city should manage its funds through a local bank or credit union.
Even states use regular banks for their treasuries. NJ uses Wells Fargo.
I’m pretty sure if they only have $350 in the bank, I’m better off than them.
Wells Fargo took my house of 15 years and sued me for the market difference after they sold it for the $12,000 payoff. Wells Fargo can burn in hell!
One reason that small cities and municipalities use large banks is that they need access to commercial paper to fund payroll and other expenses due to fluctuating cash flow. The rates for commercial paper are lower than a regular line of credit.
Smaller banks and credit unions often cannot extend this. So despite the politics, going with a larger bank can save a city money in the long run.
The people that handle the loan mods for this company do not answer phone calls. They do not let you use your income even if you have had 3 raises in six months. They want to overtalk you instead of listen. Their supervisors will not answer the phone. You cannot get reassigned to anyone else. They will ask for the same documents over and over and over. They lie.
My company dumped Wells-Fargo over the past year due to their increasing lack of service and increase of fees.
It’s not that our reps weren’t nice/friendly/helpful enough — these are the same bankers we’ve worked with for 10+ years under various other bank names. It’s Wells-Fargo’s policies and systems which have tied the hands of our bankers. When I tell my banker that I’m sending out a batch of ~2,000 checks, getting daily fraud alerts that *I* must manually verify check #s because Wells-Fargo won’t accept a check register from me (or even a list of check #s), is unacceptable.
Sadly, Wells-Fargo didn’t even notice us moving a couple hundred million out of their bank, nor the countless accounts we’ve closed in the past 6 months. Just more hassle. More mistakes. More reasons to leave.
So a couple of local community banks have received a healthy cash infusion and have been everything our experience with Wachovia was, and more.