December 8, 2000
Deputy Mayor George Stevens urges the City Treasurer, Connie Jamison, to place a hold on her approval of a contract with Wells Fargo Bank to provide the City of San Diego with basic banking services. Stevens, who serves as Co-Chairman of the joint City/County Reinvestment Task Force, is concerned with the recent decrease in reinvestment lending by Wells Fargo Bank in San Diego.
"I am deeply concerned that as major banks become larger and larger they lose their accountability to local communities," said Stevens. "We are not experiencing the same level of commitment and cooperation from Wells Fargo Bank that we have in the past."
According to Reinvestment Task Force data, in 1998 Wells Fargo Bank loaned 10% of its locally held assets for community reinvestment purposes. This includes home loans, loans for affordable housing, small business loans in low-income areas, community development loans in redevelopment areas, and corporate giving for housing and economic development. In 1999, the Bank made loans equivalent to 3% of its local assets. The agreement between banks and the Reinvestment Task Force requires providing loans equal to 5.70% of assets for community reinvestment purposes.
"I am asking the Treasurer to place a hold on the signing of this contract until we can get some answers to some of these questions from this Minneapolis based bank," stated Stevens. "The City should not go forward with a major contract without taking the opportunity to discuss their intentions regarding providing banking services to all the residents of this City."
Additionally, Stevens is disappointed that Wells Fargo Bank provides some home loan mortgages through "sub-prime" subsidiaries, such as Directors Acceptance and Wells Fargo Home Mortgage. Recent federal and state research shows that sub-prime lenders have a record of making high interest loans and charging high loan fees to people of color and residents of lower income communities.
The City Treasurer is authorized to enter into contracts for banking services and to advise the City Council of her decisions. As a result of a bidding process, she selected Wells Fargo over four other banks to provide the city's banking services for the next five years.
The Reinvestment Task Force asked Wells Fargo Bank to provide data regarding their sub-prime lending and to renegotiate their reinvestment commitment to the San Diego Region. This request was made during the acquisition of First Security Bank by Wells Fargo. Wells Fargo Bank has not responded to the request.
The Task Force is concerned that this lower level of lending in San Diego is the result of the purchase of Well Fargo Bank by the Minneapolis-based Norwest Mortgage Company. According the Reinvestment Director, Jim Bliesner, the Norwest Company has never been regulated by the Community Reinvestment Act and is not sensitive to reinvestment related lending. "San Diego has become extremely vulnerable to changes in banking practices precipitated by major national mergers," said Bliesner.