Op-Ed: Oakland Should Forego Wells Fargo

By Debbie Notkin, Susan Harman and JP Massar

 

It’s called debarment – the ability of a governing body to ban a firm from doing business with it because of egregious and/or unlawful acts, such as a big powerful bank committing substantial, documented fraud against millions of customers.Anyone not living under a rock or solely fixated on election follies likely knows of Wells Fargo’s recent transgressions.Here they are in short form:

 

From as early as 2005 through as late as mid-2015, Wells Fargo Bank opened more than two million fraudulent bank accounts and over half a million fraudulent credit card accounts, resulting in hundreds of millions of dollars in direct income to the bank from individuals who never even knew their accounts existed;

 

Over 5,000 lower-level employees have been fired for creating these transactions; it seems clear that they were required to participate in the fraud to keep their jobs, and that the scheme was known to, and probably endorsed and encouraged by, the highest-level officers and directors of the bank. During the period when false accounts were being opened, employees reported the fraud through Wells Fargo’s designated channels and were ignored;

 

 

 

 

While this fraud was being perpetrated, Wells Fargo was also engaging in fraudulent and deceptive subprime mortgage practices, for which they have been separately cited and fined $1.2 billion;

 

Recently, Wells Fargo has also agreed to settle a case with the Department of Justice for illegally repossessing more than 400 vehicles of American service personnel, over the period from 2008 to 2015.

 

Do these facts constitute grounds for debarment? We say yes: will the City Administrator agree?

 

The Oakland Municipal Code provides a procedure for debarment, and a number of reasons for doing so, including:

 

Commission of an egregious act or unlawful offense which indicates a lack of business integrity or business honesty; and

 

 

Commission of any act or omission which negatively reflects on the contractor’s quality, fitness or capacity to perform a contract with… [any] public entity, or which negatively reflects on same including, but not limited to, deficiencies in on-going contracts, false certifications or statements, fraud in performance or billing or lack of financial or technical resources.

 

 

The code gives the City Administrator the duty to investigate whether a firm should be debarred once a firm’s malfeasance has been brought to her attention. Upon concluding that debarment should take place, the code gives her the power to suspend the firm from doing further business with Oakland temporarily while formal debarment proceeds.

 

If the City of Oakland decides to prevent Wells Fargo from entering into any new business with it (such as underwriting its bonds, in particular the one voters may pass on Nov. 8), it will be in good company.

 

The states of California, Massachusetts and Illinois, the California counties of Santa Cruz and Santa Clara, EBMUD, and the cities of Chicago, Sacramento and Seattle have all halted or limited their business dealings with this Wall Street Bank. The city of San Francisco, corporate headquarters of Wells Fargo, has taken some steps and is considering taking more.

 

Wells Fargo is demonstrably guilty of multiple types of fraud, harming its customers and its lower-level employees. The City Administrator has both the legal responsibility to investigate and – because this fraud inevitably includes many of the bank’s significant base of customers in Oakland – the moral responsibility to act, and act quickly.

 

In a certified letter dated Oct. 25, we have called upon her to do so.

 

Debbie Notkin, Susan Harman and JP Massar are members of Strike Debt Bay Area.

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