By Matt Johnson
Like the Minneapolis City Council, the Seattle City Council is preparing to divest in Wells Fargo; and like the Minneapolis City Council, the Seattle City Council is preparing to pass legislation that is antithetical to judicious economic and scientific policy.
According to countercurrentnews.com, the Seattle City Council is set to end its business relationship with Wells Fargo in January for two reasons. First, Wells Fargo, created more than 2 million fake accounts and then charged their customers for those accounts.
According to King 5, which is a local NBC affiliate, the Seattle City Council ended its lending contract with the financial institution back in October because of its fake account practice. Note, Wells Fargo had already been fined for this terrible business practice by other institutions.
As Bloomberg reported in September,
Wells Fargo was fined $185 million by various regulators for opening customer accounts without the customers’ permission…
And the second reason the Seattle City Council wants to end its relationship with Wells Fargo is because the financial institution invested in the Dakota Access Pipeline.
If the Seattle City Council passes the legislation submitted by Council Member Kshama Sawant, and it’s looking like that’s going to happen, then the council will be ignoring the complex relationship fossil fuels have with both the private and public sectors, which includes the citizens of Seattle.
The council will also be ignoring the complex relationship Wells Fargo has with the City of Seattle in the form of investments; that is, the $4 billion of revenues and payments the financial institution is responsible for managing for the city throughout the year.
And the council will be ignoring the complex and beneficial relationship the financial institution has with all levels of the economy, i.e., local, state, federal, and international. This is because Wells Fargo helps spread risk throughout the various economic systems. It’s bad business for one institution, one group of residents, or one person to hold all of the financial risk.
More than likely, the Seattle City Council will end its business relationship with Wells Fargo and move this economic experiment forward. And so some immediate questions come to mind. What bank will manage the city’s revenues and payments? Has the Seattle City Council even thought about who will manage the city’s revenues and payments? Will they attempt to restrict the business practices of the new institution? Will any institution be interested in taking on a relationship with the City of Seattle?
How will Wells Fargo respond to this policy? Will they have to lay financial workers off or will they just move these jobs to another location outside the city? And how will the Seattle market respond to this decision?
Photo credit: Wikimedia
Photo explanation: Wells Fargo Center Seattle
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Categories: Urban Dynamics Blog