City responds to Wells Fargo, passes on early termination of contract

Yesterday Mayor Ed Murray, Council President Bruce Harrell, and Council Budget Chair Tim Burgess replied to Wells Fargo, officially giving notice that the city will not renew their banking services contract. They also noted that they will not be taking up the bank’s offer to terminate the contract before its termination at the end of 2018.

For background, here’s my summary of the last correspondence on the issue, from last week.

In today’s letter, they explain why they are not opting to end the contract early:

The City appreciates Wells Fargo’s offer to terminate its banking services contract immediately. However, as you acknowledge in your letter dated February 28, the complexity of banking services used by the City will require a lengthy process to secure a new vendor. A gradual transition is needed to allow for time to identify and develop a new banking contract, and to ensure City business is not interrupted.

A spokesperson for the Finance and Administrative Services Department, which oversees banking services for the city, told me yesterday afternoon that FAS intends to bring in a consultant to validate the banking services the city needs and determine whether some subset could be unbundled so that smaller banks could provide some of the services. That’s a logistical issue, but also a legal one: state law defines requirements for banks that are allowed to provide banking services to the city, so it would need to be determined whether any unbundled subset was still subject to those requirements.

The city is looking at trying to work with smaller banks for two reasons. First, it expands the set of banks that could bid on the contract; today only a handful of banks meet the state requirements for Seattle’s business. Second, many of the largest banks — the ones that qualify under state law — have the same issues that led to the city cutting ties with Wells Fargo: questionable business practices, and most notably investments in the Dakota Access Pipeline.

The FAS spokesperson said that there is currently no timeline for completing the consultant work and bidding out the banking services, but the department feels confident that it will have a new vendor (or vendors) in place before December 2018.