The Twin Cities is heading for trouble with the possible politicization of banks involved in fossil fuel development. In a proposal to the City Council (Council), Minneapolis City Council Member Alondra Cano argues that financial decisions should be better aligned with certain principles and therefore encourages the city to divest from certain accounts, like Wells Fargo. However, Cano’s rash decision fails to take into account the financial repercussions divestment would have on Minneapolis’ economy, communities, and livelihoods.
Cano’s proposal to the Council calls particular attention to Wells Fargo and U.S. Bank – two financial institutions that bring prosperity to the area. For instance, Wells Fargo provides “a range of financial services, including payroll, debt services, and standard collection and deposit services” for the city and is currently providing the city with a short-term loan of $74 million for city renovations. If the Council were to follow through on divesting its funds from Wells Fargo, the city would need to find secure alternate providers that can provide the scale of services need and meet the divestment standards or experience financial repercussions that could cripple the city.
Ironically, Cano had little idea how to approach this problem and did not provide a solution to such issues in the proposal to the Council. She even admitted that “the city’s complex payroll would be difficult for many financial institutions to handle.”
Divestment from Wells Fargo would also impact the economic growth and opportunity for Minneapolis. As already mentioned, Wells Fargo is one of the city’s leading lenders for city projects – including the downtown Target Center project. Without the investments from Wells Fargo, economic prosperity within Minneapolis will slow to a crawl.
But even more concerning is the potential for the loss of jobs. Wells Fargo is one of the state’s top employers with 20,000 workers and is the second-largest employer in downtown Minneapolis. Any divestiture measure would threaten the jobs and livelihoods of the many people who work for this financial institution.
This proposed divestiture measure, just like other divestment measures on pension funds and university endowments, is a move based on political motivations rather than financial facts. Divestment isn’t just a poor economic decision for Minneapolis, but should be a lesson that financial decisions based on social whims have repercussions in many areas. In this instance, it’s the future livelihoods of many hardworking Minneapolitans.