The divest movement urging people to take their money out of banks that behave unethically has consistently been gaining traction, and no bank is getting more pressure these days than Wells Fargo. In the latest hit, it is set to lose $475 million in contracts with the University of California.
This victory has been a long time coming.
After a nearly two-year campaign pushing the UC system to cut its ties to private prison corporations, the Afrikan Black Coalition—an alliance of the black student unions across 15 University of California campuses—says it convinced UC to terminate a number of contracts with Wells Fargo.
The group accused the San Francisco bank of “amoral practices,” such as financing the for-profit prison operators CoreCivic and GEO Group. The Afrikan Black Coalition also complained about Wells Fargo’s alleged predatory lending practices that unfairly targeted communities of color and contributed to the foreclosure crisis. The university announced its decision to the student coalition in a meeting on January 17.
“For all of those reasons, it’s very important that, where there are opportunities to target [Wells Fargo] and punish them financially, that we do so, so that … they understand that there are consequences for doing the things that they do to us,” remarked Yoel Haile, the Afrikan Black Coalition’s policy director and a recent graduate of UC Berkeley’s Goldman School of Public Policy.
The university system is just the latest case in a series of organizations and governments that have severed relationships with Wells Fargo. While many of those campaigns are in reaction to the bank’s financing of the Dakota Access pipeline, the UC system is holding the bank accountable for its role in financing private prisons as well.
The University of California had already agreed to terminate its $25 million contract with Wells Fargo by November 2016. The new agreement requires the school to end another $150 million contract by April 1. Two-thirds of the $300 million line of credit with Wells Fargo will be terminated by this month, and the remaining $100 million will be terminated after a replacement bank is found.
Multiple cities, organizations, and states are jumping on the Wells Fargo divestment train.
Ricardo Vasquez, a spokesman for the university system, confirmed through email that the University of California had canceled some of its contracts. “We value our long-standing relationship with Wells Fargo, and moving forward, we want to continue to engage with the bank as it reforms its business practices under new leadership,” Vasquez wrote in an emailed statement, referring to the resignation of Wells Fargo CEO John Stumpf in October 2016 .
For the Afrikan Black Coalition, this victory has been a long time coming.
In December 2015, University of California agreed to the coalition’s demands that it divest $25 million from private prisons, but it refused to sell its shares in Wells Fargo because it was a profitable investment. So the Afrikan Black Coalition launched an online campaign that gathered more than 8,000 signatures. Even so, UC held steadfast to its relationship with Wells Fargo.
But in September 2016, investigations revealed that Wells Fargo employees had created more than 2 million fake bank and credit card accounts to meet unrealistic sales goals. This prompted the California treasurer to suspend many of its ties with the bank. The Afrikan Black Coalition seized the moment to re-engage in talks with UC’s chief financial officer, and the university system finally agreed last month to terminate most of its relationships with the bank. “UC believes that suspending our investment banking relationships, in tandem with the state treasurer, and unwinding some of our credit relationships, were appropriate actions to take in light of the bank’s activities with respect to unauthorized bank and credit card accounts,” Vasquez wrote.
The victory comes on the heels of multiple cities, organizations, and states that are jumping on the Wells Fargo divestment train.
The state of Illinois announced last fall that it was severing ties with the bank for a year, and the city of Seattle is also close to divesting about $3 billion of city funds because of the bank’s financing of Dakota Access. The Navajo Nation has made moves to divest for the same reason.
“More than ever, people understand the role that corporations play in perpetuating state and corporate violence.”
Wells Fargo spokesperson Ruben Pulido responded with the bank’s rationale: Although Wells Fargo is one of the 17 financial institutions financing the Dakota Access pipeline, the loans they have provided amount to less than 5 percent of the total. “We are obligated to fulfill our legal obligations as outlined under the credit agreement, as long as the customer continues to meet all of its terms and conditions,” Pulido wrote.
The bank has declined to take a position on private prisons.
“Due to chronic prison overcrowding, federal and state governments have for the past 30 years been contracting out detention services. People who want to change that should address their concerns with the appropriate government officials,” Pulido wrote. “Wells Fargo is a bank. We do not set U.S. detention system policy; we have nothing to do with the setting or enforcement of laws,” he added.
Enlace, an international alliance of organizations advocating for racial and economic justice, provided the Afrikan Black Coalition with research about Wells Fargo’s lending and investment ties to private prisons, along with a toolkit to help it launch its divestment campaign.
“More than ever, people understand the role that corporations play in perpetuating state and corporate violence against people of color, immigrants and low-wage workers,” said Jamie Trinkle, Enlace’s campaign and research coordinator. “We’re turning to our local institutions to end their complicity in this system, and invest in safety instead of corporations that profit from harming and caging our communities.”
Prison divestment efforts at Yale University and Princeton University are also gaining traction, according to Trinkle.
This article was funded in part by the Surdna Foundation.
Melissa Hellmann reports on artificial intelligence at The Seattle Times and is a former Surdna reporting fellow for YES!.