In 2009, San Jose became the first city in the nation to divest from a bank because of its role in the subprime mortgage crisis. The City Council voted unanimously to pull $1 billion from the Bank of America for failing to prevent foreclosures, which the nation’s biggest banks promised to do when they accepted federal bailouts.
This week, the council will consider updating the social responsibility clause of the city’s investment policy for the first time since the Great Recession.
The proposal, spearheaded by freshmen Councilman Sergio Jimenez, comes on the heels of Seattle and San Francisco’s decisions to pull money out of Wells Fargo over the bank’s fake account scandal and its role in financing in the Dakota Access pipeline (DAPL).
“San Jose is trailing behind other large city’s [sic] such as San Francisco and Seattle who have strong policies in place that provide guidance and prioritize city values and address public concern,” Jimenez wrote. “We recommend that staff expand San Jose's investment policy … to reflect the city's commitment to comprehensive fair practices and engagement with socially responsible businesses.”
City staff, however, recommends no change to the investment rules. Per policy, the city has to review its guidelines every year. Normally, the assessment and council approval are perfunctory. Here’s what the city’s social responsibility clause looks like now:
Jimenez, who co-signed his proposal with Lan Diep, another newcomer to the council, argues that strengthening the social responsibility clause is in the public’s interest.
“It is a priority to protect the city’s investments and the public’s trust by conducting city business with partners that are committed to and consistently demonstrate fair and responsible business practices,” Jimenez wrote in his memo. “A broadened social responsibility policy will further the city’s financial objectives and ensure that the city does not support partners that engage in criminal or systematic deceptive, fraudulent, or abusive business practices.”
San Jose banks with Wells Fargo, which has been the target of divestment campaigns throughout the nation. Last month, the University of California system agreed to terminate $475 million worth of contracts with Wells Fargo after activists called attention to the bank’s ties to private prisons.
California lawmakers are debating legislation that would divest the state’s public employee pension funds from Wells Fargo and other companies financing the Dakota Access pipeline. Silicon Valley Assemblyman Ash Kalra (D-San Jose) proposed Assembly Bill 20 after visiting the Standing Rock Sioux Reservation, where thousands of indigenous people and allies camped out for months to protest the $3.8 billion pipeline.
Last month, Kalra spoke at a “NoDAPL divestment crawl” in Willow Glen, where protesters marched down Lincoln Avenue with signs and a bullhorn to urge people to move their money to community banks and credit unions. The former San Jose councilman said he’s seen a lot of backlash to his divestment bill, including from the state’s two pension funds—CalPERS and CalSTRS.
“If we’re going to say as a state, as Californians, that we’re going to stand up to climate change, then we need to act on that,” Kalra said.
More from the San Jose City Council agenda for March 7, 2017:
- The council will vote on whether to approve a $2.5 million contract with CMG Landscape Architecture to redesign St. James Park. The landscaping company redesign proposal was chosen in a contest, which sparked some controversy when another contender accused the judges of giving the winner preferential treatment. Mayor Sam Liccardo and downtown Councilman Raul Peralez suggested knocking the contract down to $1.5 million while also prioritizing the contruction of a Levitt Pavilion, which they said would bring more people to the park. “The catalyst for St. James Park … will not be creative designs, or even construction projects,” Liccardo and Peralez said in a shared memo. “It will be people. We must activate the park to engage the surrounding community, to make it a welcoming, fun, and safe gathering space for residents aged 8 to 80.”
WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260