Las Cruces trying to separate from Wells Fargo

LAS CRUCES - The city is still banking with Wells Fargo. However, Las Cruces city councilors have directed staff to look elsewhere for services.

The discussion of banking services came up at Monday's council meeting, with city staff presenting two options. The first option would split the city’s investment services and banking services between two banks. The second option was to piggyback on a contract between Wells Fargo and the city of Santa Fe.

The state's procurement code does not allow a city to change providers without a request for proposals. And the RFP process takes time. However, a municipality can "piggyback" on another city's agreement that has already gone through the RFP process.

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In the first option presented to council, Wells Fargo would have provided banking services and U.S. Bank would have been contracted to provide investment services. Both would have received $200,000 per year with renewal options for the second and third years.

City Manager Stuart Ed said the second option, piggybacking off of Santa Fe’s contract, was preferred because the award process used in the first option did not reflect the council’s desire to consider the award applicants’ business ethics and practices. That, council members said, was important because their constituents had called for the city to end all business relationships with Wells Fargo following news of the bank creating fraudulent accounts and selling services without customers’ knowledge. 

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The national scandal first came to light in early September 2016, when the bank said roughly 1.5 million bank accounts and about 565,000 credit card accounts might have been created without customer authorization. In August, Wells Fargo revised that number to as many as 3.5 million unauthorized accounts. The bank has paid hundreds of millions of dollars in settlements and payout to consumers.

The piggyback option, Ed said, would allow the city to continue to operate as usual while staff designed a new procurement system, a process Ed assured council could be complete by December with help from outside experts.

The delay “allows us to maintain status quo, maintain investments and banking until we can issue another bid that reflects your policy,” Ed said.

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Councilor Jack Eakman said he was displeased that the procurement process did not adhere to council’s wishes to break ties with Wells Fargo.

“We should have policy we don’t use vendors who profit from illegal activity,” Eakman said. “This item did not get addressed, in my mind, appropriately.”

All members of council agreed and expressed concerns that the city would be continuing to work with Wells Fargo, even if for a short time. Ed assured the council a new procurement process would be in place by year’s end and the contract — limited up to one year by council amendment — could be cancelled with 15-day notice once the city had its contract in place, separate from Santa Fe.

The city has about $90 million in city accounts with Wells Fargo, of which $10 million is operating cash, according to city spokesman Udell Vigil. Annual transactions are around $820 million. 

The city has on average $270 million total cash and investments with Wells Fargo and the treasurer’s office currently manages the remainder of the investments.

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Councilor Olga Pedroza noted that “100 percent” of calls on the topic from her constituents had demanded the city separate from Wells Fargo.

During public comment, Kathy Wooten supported the council’s decision.

“Good for you, you’re unified and you’re representing us,” Wooten said. “Time is of the essence. Where there’s a will, there’s a way and this is the will of the citizens.”

In August, Santa Fe city councilors approved a four-year contract extension with Wells Fargo by a vote of 6-3. 

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The Santa Fe New Mexican reported Santa Fe councilors, "both for and against the measure, expressed trepidation over the extension through 2021, saying the banking giant’s financial support of the Dakota Access Pipeline and fraudulent retail account-creation practices suggested a corporate culture that does not align with the community’s values."

Jason Gibbs may be reached at 575-541-5451, jgibbs@lcsun-news.com or @fjgwriter on Twitter.