California City Thinking Of Closing Wells Fargo Account Over Foreclosure Debacle

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!


Edit Your Comment

  1. Cat says:

    They may have trouble finding a more consumer-friendly financial institution.

  2. Anathema777 says:

    “…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.

  3. Hi_Hello says:

    hmmm…. I always thought city government had their money in the state treasury or some sort of city government own bank.

    • Loias supports harsher punishments against corporations says:

      Can you provide me an example of a “city-owned government bank” in the U.S?

    • floydfan says:

      Even states use regular banks for their treasuries. NJ uses Wells Fargo.

      • Hi_Hello says:

        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…

  4. DariusC says:

    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.

    • Megalomania says:

      “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.

    • Thassodar says:

      Chase charges my dad to handle his sizable retirement fund, and lost $25,000 of it “investing” in shit.

    • FLConsumer says:

      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.

  5. Loias supports harsher punishments against corporations says:

    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.

    • Marlin says:

      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.

    • Alan says:

      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.

    • bluevideo says:

      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”.

    • stevenpdx says:

      Wells Fargo is headquartered in San Francisco, so by using it, Berkeley IS supporting a local bank.

    • joako says:

      The local bank probably got bought out at some point. LOL watch WF buy out the next bank they use.

  6. Chmeeee says:

    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.

  7. Voice of Reason says:

    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.

    • Matzoball says:

      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.

  8. Hotscot says:

    Ohh..they’re talking about Berkeley…the headline states they’re talking about California City.,_California

    • Engine-B says:

      I always think California City, the actual city with that name, everytime I see a headline like this.

  9. jerry101 says:

    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)

  10. jeffbone says:

    …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.

  11. Lightweight says:

    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.

  12. floydfan says:

    Even states use regular banks for their treasuries. NJ uses Wells Fargo.

  13. baristabrawl says:

    I’m pretty sure if they only have $350 in the bank, I’m better off than them.

  14. SporadicBlah says:

    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!

  15. ArmitageShanks says:

    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.

  16. SoCalGNX says:

    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.

  17. FLConsumer says:

    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.