The activist group is circulating an online petition urging the Elk Grove City Council to take taxpayer money out of Bank of America, citing the bank’s legal troubles and what they view as unfair lending practices.
The group hopes to collect 500 signatures by January 25, when they’ll plead their case before the city council, said organizer Todd Elving. More than 100 signatures had been collected as of January 8.
Elk Grove had over $6 million in deposits with Bank of America as of October 2011, according to the city’s latest treasurer’s report. Bank of America also serves as custodian of the city’s securities portfolio, valued at $77 million in October, though the city makes its own decisions about how to invest that money, said city spokesperson Christian Punsal.
Public agencies’ contracts with major banks are increasingly coming under fire from protesters identified with the Occupy Wall Street movement. Last fall, the trustees of one Bay Area community college district voted to transfer its money from large financial institutions to community banks and credit unions. The Seattle City Council in November passed an ordinance saying the city would “review its banking and investment practices to ensure that public funds are invested in responsible financial institutions that support our community.”
Elving said members of Occupy Elk Grove recently participated in a conference call organized by SignOn.org, a division of MoveOn.org that is sponsoring the online petition and others like it. On the call, activists from around the country discussed possible campaigns against Bank of America, which is currently being sued or investigated for mortgage fraud by multiple state attorneys general.
“We can do better,” Elving told Elk Grove Patch. “We could find a bank that is above board [and] treats its customers right, I’m sure at less cost to the taxpayers.”
A local bank or credit union could better handle the money, Elving said.
Elk Grove Patch contacted several Bank of America corporate media contacts to gauge their reactions to the petition. Spokesperson Diane Wagner answered questions regarding the bank’s contract with Elk Grove but wouldn't comment on the petition. "Due to privacy, we are unable to comment on customer relationships and therefore that is our statement," she said.
The city’s relationship with Bank of America dates back to 2008, when the city accepted bids from banks to provide treasury services. Bank of America offered the most comprehensive service package and had the most local branches, said Punsal.
But the bank has since faced criticism of its mortgage practices:
- In January 2011, Bank of America reached a $2.8 billion settlement with Fannie Mae & Freddie Mac over bad mortgages,
- In summer 2011, Bank of America closed a deal to pay $8.5 billion to settle claims from investors who lost money on mortgage securities, and
- In December 2011, Bank of America agreed to pay out a $335 million settlement for predatory mortgage lending practices.
Current city council members have expressed a preference for supporting local businesses, recently choosing Elk Grove Ford over Sacramento-based Downtown Ford to service city vehicles—a decision that , which had submitted a lower bid for the contract.
At least one council member said he’d be open to moving city funds.
“I’d rather support a local operation,” said Vice Mayor Patrick Hume, adding that he’d have to hear details of the proposal before making a decision.
In addition to its relationship with Bank of America, Elk Grove also held several million dollars in savings accounts and certificates of deposit at local and regional banks as of last October, including Union Bank of California, PremierWest Bank, Five Star Bank and River City Bank. Another $40 million was invested in the Local Agency Investment Fund, a pooled fund managed by the State of California.
Felicia Mello contributed reporting to this story.